Japanese IT firm NEC has agreed to acquire 100% of the shares of Swiss fintech firm Avaloq, which offers banking and wealth management technology, in a deal valued at CHF2.05bn ($2.2bn).

Transaction details

The sellers are Avaloq founder and employees as well as private equity firm Warburg Pincus.

Warburg Pincus holds a 45% stake in Avaloq, while the rest is held by Avaloq founder and chairman Francisco Fernandez and employees.

The purchase is said to be mutually beneficial, enabling Avaloq to ramp up its long-term growth, global expansion and value creation strategy.

On the other hand, the takeover will support NEC’s global entry into the digital finance space.

Another positive side is that the deal will not result in redundancies.

Deal closure is anticipated by April next year, subject to approvals.

NEC president and CEO Takashi Niino said: “NEC aims to further expand its business in the digital government and digital finance areas, by globally developing SaaS and BPaaS business models that utilise software and technologies from throughout the NEC Group, including Avaloq’s.”

Avaloq specialises in business process as a service (BPaaS) and software as a service (SaaS) solutions.

The company serves banks and wealth managers, with its client list including Deutsche Bank and HSBC.

It currently focuses on catering to high-end wealth managers and private banks worldwide. However, in the future, it aims to democratise wealth management by including the affluent segment instead of only HNWIs.

Fernandez noted: “My goal was to find a partner and owner, who can make Avaloq grow and prosper further, for many years to come.

“Talking to NEC’s top managers it became clear to me, that they share my ambition for Avaloq to continue to shape the future of the financial industry by continuing to invest heavily in R&D.

“But I also sensed the cultural fit, caring about customers and people, striving for excellence and highest quality standards, for which ultimately Switzerland and Japan stand for.”