Ideagen PLC – Acquisition of Redland Solutions Ltd

Ideagen PLC – Acquisition of Redland Solutions Ltd

Ideagen PLC (AIM: IDEA), a leading supplier of Integrated Risk Management software to highly regulated industries, is pleased to announce the acquisition of the entire issued share capital of Redland Solutions Ltd for a net consideration of £15.8m.

Highlights  

  • Redland is a fast growing, profitable RegTec SaaS company supplying software to the financial services industry
  • Redland's leading SaaS platform 'Insight' provides banks, investment managers, asset managers and insurance companies with solutions that underpin the Senior Manager & Certification Regime (SMCR) and individual employee competency 
  • Insight is used by over 40 organisations including 7 FTSE 100 and 2 Fortune 100 companies 
  • Customers include Nomura, Santander, Investec, Hargreaves Lansdown, and Rathbones 
  • Current Annual Recurring Revenue (ARR) is approximately £3m - an increase of 50% from April 2018 
  • Current run rate revenues are approximately £4.2m* and current run rate costs are approximately £2.7m 
  • Cash generation of > 100% of EBITDA in the year to 31 March 2019 
  • The acquisition is immediately earnings enhancing and is expected to add mid-single digit accretion within the current financial year

*ARR book at May 31st plus Last Twelve Months of services revenue    

Consideration for the Acquisition 

The total net consideration payable is £15.8m in cash being £17.5m gross consideration less cash balances in Redland of approximately £1.7m. A further £0.5m will be payable in 12 months based on certain ARR targets being achieved.

The consideration will be funded from an extended revolving credit facility with NatWest Bank. The facility is for up to £28m for three years, carries interest at 2% over LIBOR and is secured by debentures and guarantees over the Group's assets.

David Hornsby, Executive Chairman of Ideagen, commented:   

"Redland is an extremely valuable addition to the Group and is in line with our strategy of acquiring Integrated Risk Management businesses that have strong IP and growing recurring revenues. Financial Services is an important vertical market for Ideagen and the combination of Redland's Insight Platform with Ideagen's Pentana will provide a compelling proposition covering internal audit, risk management, certification and SMCR compliance''

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