In July, Equisoft announced that it acquired Altus. Based in Bath, England, this company provides a transaction platform for pension plan administrators and asset managers.
Altus is recognized as a key player in providing advice and technology to the pension portfolio transfer segment, a niche market in the UK. Equisoft believes that Altus' product range and significant market penetration will deepen its presence in this market. “The deal also provides more value with 150 clients from Altus. It brings our total of employees to 750 and over 250 clients globally, most of them large institutions. We are getting more specialized and larger for economies of scale,” the fintech notes on its website.
In this transaction of undisclosed value, Equisoft gains a seventh office worldwide. The company now boasts of growth surpassing 15 per cent, with annual income of over $100 million. Financing for the acquisition was provided by Export Development Canada (EDC), Fondaction and BMO Bank of Montreal.
Breakthrough in Europe
By acquiring a leader in investment and pension fund management solutions in the U.K., the fintech is gaining not only depth but also credibility as it makes its first foray into Europe's mature market, founder and CEO Luis Romero told The Insurance Portal. He points out that the U.K. is the largest retirement, insurance and investment market in Europe.
Altus’ target markets include the group pension market, that is defined benefit pension plans. To date, Equisoft has entered the group retirement market through its insurance clients, which are primarily active in the defined contribution pension sector.
“We do have a lot of insurers offering pension plans (defined contribution plans). There are overlaps, but Altus is much deeper into pension plans (defined benefit plans),” the CEO explains.
Equisoft approached Altus
François Levasseur, Vice-President of Global Alliances and Acquisitions at Equisoft, set the acquisition process in motion by contacting a colleague of Altus co-founder and CEO Kevin Okell, Luis Romero explains.
In announcing the deal, Okell said Altus has invested heavily in research and development. It had also made a substantial investment in fin tech, including Finscape, a business analytics platform for the British financial industry. “Altus was looking for a partner who understood its enormous potential and the critical role it could play in the investment value chain. Equisoft grasped this immediately, committing to further investment in the product and to expanding its geographic coverage,” Okell says.
Appearing virtually alongside Romero, Kevin Okell told The Insurance Portal via the Teams video conferencing platform that he was approached “in the last five years by 20 or 30 organizations, but they were never quite right. Then I met Luis twice, and he insisted,” he recalls.
Asked what led him to accept Luis Romero's offer, Okell explains that Equisoft had “a lot of that we didn’t have. And we also have a lot in common. We target the same markets and we have complementary skills. As a financial services company that offers solutions to the (pension) sector, we understand the challenges of their business. We’ve been incredibly successful in the last 15 years. But there’s a lot more we can do and I think we need to be part of a bigger organization.”
Credibility and economies of scale
The deal makes sense, Luis Romero says, pointing out that “Europe is a very mature market: we need credibility to grow that market. Organically, it would be too long.”
The transaction provides more value, Romero continues. “We are getting more specialized and larger for economies of scale. Equisoft’s total employees will now be 750, and over 250 clients globally, “most of them large institutions,” he points out.
Regulation clinched the sale
Altus’ expertise is another asset, Romero adds. “A few years back in Canada, everything was about CRM 2 (MRCC2), and we would always quote the UK, where the regulation came earlier and was a lot stronger,” he says.
The acquired firm’s expertise is not only unique because the firm operates in the U.K., says Romero. It also lies in developing solutions to help pension and investment product players deal with the regulations that came into effect at the turn of 2012.
Kevin Okell recalls the notorious mis-sellingoffinancial investment products that led to the regulatory review of individual distribution on January 1, 2013. “Now, there’s no commission in investment products in UK. The regulator approached it the same way as it is for lawyers: The financial advisor charges the client and gets paid by the client,” he explains.
“From Altus’ perspective, the whole miss-selling scandal and the change to the commercial model where the advisor gets paid by the client, not by manufacturers, has led to an explosion in investment platforms in the industry in the UK,” Okell continues.
New chief financial officer
Equisoft has been in high gear for the past few months. Shortly before acquiring Altus on July 5, 2021, the fintech announced that it appointed Brian Cosgrove chief financial officer. Reporting directly to Luis Romero, Cosgrove will help Equisoft develop and deploy its global expansion and sustainable growth strategy.
He will also enhance Equisoft's financial effectiveness. A specialist in growth acceleration for publicly and privately held tech companies, Cosgrove has extensive experience with software and professional services organizations.
“Brian is a strategy-focused CFO who will complement our strong performance-oriented culture. His impressive reputation for execution and achieving results, and his proven track record in driving growth make him the right choice for the position,” Luis Romero explains.
Cosgrove has served as CFO of several fast-growing tech companies over the past decade, Equisoft continues. He has driven robust organic growth and executed M&A deals totalling more than $1 billion. He previously served as chief financial officer of Intelerad Medical Systems, a position he also held at Tecsys and Logibec.
