FD Technologies, a leading tech firm based in Newry, has struck a deal to divest a significant portion of its business to the American software firm EPAM at a price of £230 million (or around €274 million). This transaction, which concerns the First Derivatives division of the company, is still pending shareholder approval and is projected to be finalised in the last quarter of 2024. Post the requisite deductions such as transaction costs and standard closing adjustments, the net money acquired from the deal is estimated to be around £205 million.
FD Technologies, previously known as First Derivatives, is one of the most impactful and extensive tech enterprises indigenous to Northern Ireland. The company retains an employee base of over 1,800 individuals and services the world’s most sizable banks.
Founded by Brian Conlon in 1996, the company started its operations in his mother’s spare bedroom, with the Conlon family still retaining substantial shares in the enterprise. However, particulars regarding the payouts to shareholders from this transaction are not yet available.
FD Technologies, which is a listed entity in London, offers risk management and trading software solutions to some of the most eminent firms across the globe in sectors including energy, manufacturing, technology, automotive, and finance.
The client of the deal, EPAM is a company that specialises in AI-enabled and cloud-based transformation services and digital product engineering. Goodbody characterises it as an experienced consulting ally for global enterprises and start-ups.
FD Technologies highlighted that this sale would help the company prioritise its focus on KX, another segment of the group which holds significant potential for value creation. KX employs approximately 500 individuals, has an annual turnover of about £80 million, and is expected to be bolstered by the resources provided by the deal, allowing it to effectively carry out its growth objectives in its target markets.
The transaction will also foster symbiosis for KX through its partnership with EPAM, offering professional services in key markets. The deal will also facilitate the clearance of the group’s net debt, which stood at around £20 million as of August 31, 2024, while simultaneously allowing the return of surplus cash to shareholders.
In terms of EPAM, the deal translates to an addition of over 100 new clients to its portfolio, thus stepping up its competitive position and defining a fresh benchmark in technology services within the financial services domain.
FD Technologies’ CEO, Seamus Keating, expressed his optimism about the divestment, stating it will have favourable implications for all stakeholders – shareholders, as well as the clients and employees of the KX and First Derivative enterprise.
On the same note, VP of worldwide business at EPAM, Balazs Fejes, also conveyed his enthusiasm about the deal. He stated that this venture is a significant one, set to not only bring more returns for their clientele, but also open new avenues of growth for their workforce.
In a parallel update, FD Technologies published a trading report that indicated KX and the First Derivative businesses’ performance were consistent with the board’s predicted outcomes for the initial half of its financial year which concluded on August 31st, 2024.
The annual contract value increment achieved by KX was £7.4 million, within the projected £6-8 million window for that timeframe. As per the predictions for 2025, the board is expecting an annual contract value addition in the £16-£18 million bracket, which would spur an annual contract value growth of 11-15 per cent with steady currency.
However, customers of the First Derivative firm’s capital markets consulting services are exhibiting cautious spending habits. The period’s revenue, approximately £79 million, paralleled the latter half of its full 2024 financial year.