NEC Corporation announced the acquisition of Avaloq Group AG, a financial software company based in Switzerland, for 2.05 billion Swiss francs or $2.23 billion.
The acquisition of Avaloq is part of NEC strategy to strengthen its digital finance software business.
NEC will promote global sales expansion of Avaloq’s software by taking advantage of NEC Group sales channels, including KMD, a European software and IT services provider that NEC acquired in February 2019.
The acquisition is expected to be completed by April 2021. Avaloq has more than 2,000 employees. Warburg Pincus owns 45 percent stake in Avaloq. The rest 55 percent stake is owned by management and employees.
Japan-based NEC focuses on Solutions for Society businesses that utilize the strengths of ICT to enhance social infrastructure.
NEC’s biometric and AI technologies are driving the expansion of business globally, mainly in the digital government field. NEC is now shifting more attention towards SaaS business models that utilize software capable of being horizontally deployed.
Business growth of Avaloq, which has more than 150 customers in 30 countries, is partially driven by recurring business from the provision of software as a service (SaaS) and business process as a service (BPaaS) for wealth management and other applications.
Avaloq has the top market share in wealth management software within Europe and Asia Pacific.
In recent years Avaloq has worked with FinTech startups and other partners to aggressively promote digitization through AI, blockchain and other technologies as part of capitalizing on new service needs brought on by open banking, particularly in Europe.
“NEC will be placing importance on building relationship with Avaloq and its customers, and aims to create new solutions that combine Avaloq’s software with NEC’s technologies, such as its brand of biometric authentication solutions, Bio-Idiom, the company’s AI technology brand, NEC the WISE, and its blockchain technologies,” said Takashi Niino, president and CEO of NEC Corporation.
NEC aims to expand its business and improve profitability, mainly in the digital government and digital finance areas, by globally developing SaaS business models that utilize software and technologies from throughout the NEC Group.