Intertrust acquires Viteos for USD 330 million

Intertrust N.V. (“Intertrust”), a leading global provider of expert administrative services to corporate, fund, capital markets and private wealth clients, today announces the acquisition of Viteos¹, a provider of leading-edge technology solutions for U.S. funds, from PPC Enterprises LLC, FiveW Capital LLC (an affiliate of 22C Capital) and Viteos management.

Viteos is a tech-enabled alternative funds industry leader providing end-to-end middle and back office administration for top tier hedge funds, private equity, real estate, private debt and other alternative asset managers. Viteos has approximately 715 employees and operates a global delivery model with its headquarters and sales team in the U.S. supported by Centres of Excellence in India. Viteos delivered revenues of USD 52 million², 94% in the U.S., having grown at an organic CAGR of 22% over the last two years, and an EBITDA margin of 36.6%.

Transaction highlights

• Competitive game-changer for Intertrust, accelerating our strategy to become a global leader in tech-enabled corporate and fund solutions through:

  • Gaining a material presence in the U.S., increasing exposure to funds and accelerating our growth potential

  • Leveraging Viteos’ digitalisation and automation technology

  • Building on Viteos’ offshore Centres of Excellence

• Enterprise value of USD 330 million (EUR 294 million³), resulting in a post-synergy multiple of 8.0x FYE March 2019 EBITDA

• Significant net run-rate annual cost synergies of approximately USD 22 million⁴expected primarily from offshoring

• ROIC expected to exceed Intertrust’s WACC by 2021 and reach double-digits by 2022

• Mid-single digit EPS accretion expected by 2020 with double- digit accretion expected by 2021

• Sound financing structure: approximately 4.1x leverage ratio⁵ at closing, with strong cash generation expected to drive leverage ratio below 3.0x by 2021

• Medium-term guidance increased to reflect enhanced revenue growth and cost synergies

• Viteos’ co-founders, Shankar Iyer and Chitra Baskar (formerly CEO and COO, respectively), will join our Executive Committee and, along with other key employees, have reinvested approximately 35% of their after-tax proceeds in Intertrust shares

Strategic rationale

The acquisition of Viteos is an acceleration of our strategy to become a global leader in tech-enabled corporate and fund solutions, adding a high growth provider of leading-edge technology solutions with a top 10 position in U.S. fund administration and over 80 top tier clients.

The combined group will build on the existing technology partnership between the two companies and the professional relationships between the management teams to drive further growth and lead the digitalisation and innovation of the industry. Viteos’ world-class client base and technology solutions, developed by a team of 130 technology experts, significantly expand the market potential for Intertrust into higher growth adjacencies with attractive cross-selling and upselling opportunities.

The acquisition of Viteos meets the strategic and M&A objectives set out in our Capital Markets Day and, in particular, delivers:

• Meaningful presence in the U.S. and increased exposure to funds – the combined group will hold a top 10 position in U.S. fund administration providing mission-critical services to asset managers.

• Accelerated growth potential – Viteos brings new clients, services and technology solutions which expand Intertrust’s market potential into higher growth adjacencies with an annual market value of >EUR 3.5 billion, resulting in a total market potential in excess of EUR 10.0 billion growing at 4-6% per annum (up from EUR 6.5 billion growing at 3-5%).  

• Strengthened technology foundation – Viteos is at the forefront of digitising and automating fund administration with leading-edge technologies including blockchain, workflow automation, RPA⁶, and digitalisation/OCR⁷. Leveraging these tools, the combined group will have the potential to drive incremental revenue growth through service innovation and reduce costs through service automation.

• Significant step towards operational excellence – building on Viteos’ offshore Centres of Excellence in India will allow us to fast-track our standardisation, centralisation and shared services initiatives, improving the efficiency and quality of our services.

Commenting on today’s announcement, Stephanie Miller, CEO of Intertrust, said:

“Today I am thrilled to announce the acquisition of Viteos. This is a significant leap forward for Intertrust which will accelerate our strategy in every way.

The combination of these world-class businesses enhances our global position in fund services, expands our presence in the U.S. and unlocks many opportunities to cross sell our products and services. It will provide tremendous benefits to our existing clients through advanced technology, a digitised delivery model and a solution-oriented service suite. With the addition of over 700 employees including 130 technology experts, I am particularly excited for the future innovations that our combined organisation will bring to the industry.

These benefits are reflected in the strong value creation from the transaction in the form of double-digit ROIC, double-digit EPS accretion as well as increased growth and margin guidance.

Furthermore, we welcome a Viteos team who is dynamic, engaged and will further our goal of becoming the employer of choice in our industry. Earlier this year Intertrust started a powerful collaboration with Viteos. Today we move forward together as one company to lead the digitalisation and innovation of our industry.”

Shankar Iyer, CEO of Viteos, said:

“This is a very exciting opportunity for Viteos to become an integral part of a successful, global business. We have longstanding relationships with the Intertrust team who are familiar with our industry-leading technology solutions. By bringing together our complementary strengths and capabilities, we will significantly enhance the future prospects for the combined group. We look forward to working with Stephanie and her team and are deeply committed to delivering on our shared strategic objectives.”