Support service provider SimplyBiz has begun to deploy some of the funds raised from its stock market float with a deal to buy ratings and technology business Defaqto.
SimplyBiz will pay £74.3m to acquire the entire issued share capital of Regulus Topco Limited, Defaqto’s parent.
On completion, Defaqto will have £3.4m in cash on its balance sheet, which will also be included in the acquisition.
SimplyBiz’s announcement to the stock market this morning says that it will “offer Defaqto access to its knowledge and experience of the advisory and asset management markets”, while Defaqto will help SimplyBiz as it eyes expansion into general insurance and banking.
The deal is being funded through a combination of new share placings by SimplyBiz, £37.5m of borrowings from new bank facilities, and £3m from its cash reserves, with the deal only to go ahead if the share placing is successful.
A statement from Defaqto says the firm will remain operationally independent after the sale.
Defaqto chief executive Zahid Bilgrami says: “While it will enable us to continue operating in an independent and autonomous manner, it will also carry many advantages of being a part of a listed entity. It will enable us to develop new technology faster, and thus continue to develop market-leading products for our clients at a time of vast technological change in the financial services sector.”
SimplyBiz joint chief executives Neil Stevens and Matt Timmins say the acquisition will unlock new opportunities for growth.
In a joint statement, they said: “The combination of the largest provider of outsourced regulatory and business support to the retail financial services market, with one of the leading providers of financial information and technology, will create a market leading platform across Retail Financial Services.
“Collectively the two businesses will work to enhance our proposition to the Banking and General Insurance sectors whilst continuing to invest in the leading fintech platform.
“Having long respected the Defaqto management team, we also recognise not just the strong strategic fit of the business, but also its cultural alignment.
“Defaqto is a business built upon industry leading talent and we look forward to working with our new colleagues as we continue to enhance services to financial intermediaries and product providers, and deliver value for shareholders.”