The Bravura Solutions Ltd (ASX: BVS) share price will be one to watch on Monday after the announcement of a new acquisition.
What did Bravura announce?
This morning Bravura announced the acquisition of Delta Financial Systems for a total consideration of up to 23 million pounds (A$41.5 million). This will be funded from its existing cash reserves.
According to the release, Delta is a UK-based software company that provides technology to power complex pensions administration in the UK market. Its highly regarded products support the administration of self-invested personal pensions (SIPPs) and Small Self-Administered Schemes (SSASs). These include the full range of complex client drawdown options available under the pension freedoms legislation.
Delta’s technology currently supports the needs of more than 30 UK clients and generated pro forma revenue of 6 million pounds in FY 2020. It is forecast to achieve revenue growth in the range of 20% to 30% this year, with margins similar to Bravura’s Wealth Management segment.
In light of this, the acquisition is expected to be earnings per share accretive in FY 2021.
Why acquire Delta?
Management notes that the acquisition broadens its product suite. Furthermore, it feels Delta’s products represent a natural extension to Bravura’s core Sonata offering and expand its ecosystem of products and services. The acquisition will also provide an opportunity to cross-sell Bravura’s other products to Delta’s client base.
The company’s Chief Executive Officer, Tony Klim, commented: “We are delighted that Delta is joining Bravura. Both businesses have complementary products that together, provide a compelling offering to support the mission-critical operations of wealth management firms in the UK.”
Delta’s Chief Executive Officer, Michael Power, is looking forward to working with Bravura.
He said “Bravura is a leader in the UK wealth management marketplace and Delta’s products sit perfectly alongside Bravura’s offering. The Delta management team look forward to working together with Bravura to deliver outstanding service to both Bravura’s clients and Delta’s clients.”
Bravura expects the acquisition to complete by the end of October 2020, subject to regulatory approvals.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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