Iress recoups less than half of OneVue investment

ANALYSIS

When something which was acquired barely four years’ ago as part of a $115 million transaction is sold for $1 million plus the possibility of an earn-out, you know that a strategy has not played out as intended.

At best, the Iress OneVue acquisition has been sold down for around $51 million albeit some further returns may be generated from earn-out arrangements. Worth noting is that the authors of the OneVue transaction are no longer part of Iress. The company points out that it retains the superannuation element of the OneVue business.

When Iress yesterday announced that it had sold the OneVue platforms business to Praemium it represented the end of an ambitious strategy which did not play out; a strategy which was supposed to challenge the likes of HUB24 and Netwealth.

In November 2020 Iress boldly announced that it was acquiring the OneVue business stating: “The combination of Iress’ technology footprint and OneVue’s market-leading managed fund admin business provides a unique opportunity to deliver end-to-end investment infrastructure”.

“Iress and OneVue combined will provide open infrastructure to enable the industry and investors to transact and report seamlessly. Improved efficiency and transparency for all participants,” it said referring to a “clear plan to integrate and deliver new investment infrastructure-as-a-service to clients from 2021”.

In other words, Iress saw the acquisition of OneVue’s business as an opportunity to join the dots between its almost ubiquitous Xplan software and the business of investment implementation dominated by the platform providers.

Sadly for Iress, what represented a significant and expensive transaction failed to deliver and that became clear on the company’s balance sheet more than two years’ ago meaning that yesterday’s announcement of the sale to Praemium was surprising only far how little is being paid.

Iress last week used its half-year results and a $137.5 million loss to reinforce that it is a company in transition a process which gained momentum in October last year when the company unloaded the other element of the OneVue business – the Managed Funds Administration (MFA) business for $50.5 million.

It is worth noting that at the time of the OneVue sale to Iress, there was talk of OneVue founder and chief executive, Connie McKeage having sold relatively cheaply but, with hindsight, she appears to have capitalised on the market mood prevailed in 2020.

For its part, Praemium can be satisfied with picking up a relative bargain which would expand Praemium’s funds under advice by an estimated $4 billion, with the company saying it will accelerate its growth plans, leveraging the scale of its investment platform technology and resource base.

“Additionally it will expand Praemium’s client base, increase market share and strengthen its position in the Australian platform market,” Praemium said.