Leading growth investor Synova Capital (“Synova”) is delighted to announce the sale of financial services technology business, Defaqto (or the “Group”), to The SimplyBiz Group plc [AIM: SBIZ] (“SimplyBiz”), the UK’s leading provider of compliance and business services to financial advisers and financial institutions for a total consideration of £74.3m. The investment has generated an overall return to Synova of 3.9x invested capital and an IRR of 46%.
Defaqto is the UK’s most comprehensive data provider on the features and performance of UK financial services products enabling its customers and consumers to make better informed decisions. Growth has been achieved by investment in both the senior team and the data and analytics capabilities of the Group with profits growing fourfold during Synova’s period of ownership.
More recently Defaqto and SimplyBiz partnered to develop, Centra, a new end-to-end financial planning product for IFA’s powered by Defaqto’s Engage software, which allows SimplyBiz’s adviser network to consolidate all their financial planning systems into one integrated system to enable seamless and compliant advice to be delivered to their clients.
The sale of Defaqto represents the fourth exit from Synova’s £110m Fund II, all announced within the last six months, following the sale of 4Ways Diagnostics, returning 6x cost, the sale of Stackhouse Poland to Arthur J. Gallagher & Co. returning 5.6x cost and the sale of Meritsoft to Cognizant returning an initial 4x cost. Four of the eight companies in Fund II have now been exited at an average return of 5x cost and at a total enterprise value of £560m. Fund II has now returned 3x its total invested capital to investors with half of the portfolio still to be realised.
Philip Shapiro, a Managing Partner of Synova and a Non-Executive Director of Defaqto, commented: “We are delighted to have achieved another strong return for our investors through the sale of Defaqto, the latest in a series of exceptional exits for the Fund. Our partnership with this very talented management team, led by Zahid, and supported by Chris Samuel as Chairman, has delivered outstanding growth since our investment in 2015. We believe the combination with SimplyBiz will create a market leading platform across Retail Financial Services.”
Zahid Bilgrami, CEO of Defaqto, said: “Synova’s support alongside our Chairman Chris Samuel, has been instrumental in enhancing our position in the market, in assisting us with the evolution of our strategy, and ultimately finding the right partner for the next stage of our growth. The acquisition by SimplyBiz opens an exciting new chapter in our development as a leading financial information business, and we look forward to the many opportunities that being part of a larger group will present. While it will enable us to continue operating in an independent and autonomous manner, it will also carry many advantages of being a part of a listed entity. It will enable us to develop new technology faster, and thus continue to develop market-leading products for our clients at a time of vast technological change in the Financial Services sector.”
Chris Samuel, Non-executive Chairman of Defaqto, said: “Over the last four years under Synova’s ownership, Defaqto has grown immeasurably stronger. I have no doubt that this would not have been possible without the strong support and input from Philip Shapiro and the Synova team, the transformational business strategy and plans, along with the courage and determination to implement them, prepared by Zahid and his management team and, of course, the hard work and commitment from all the staff. I cannot think of a better partner to take the Business forward than SimplyBiz, who will provide the support to further enhance all of Defaqto’s various business lines.”
