FD Technologies shareholders to receive £120 million following acquisition by EPAM Systems

In a significant shift for FD Technologies, shareholders are set to receive £120 million following the impending sale of the majority of the business to US software firm EPAM Systems. The acquisition, which is valued at £230 million, was finalised in October, signalling a transformative phase for both companies involved.

The agreement will result in the transfer of approximately 1,800 employees to EPAM, with around 650 staff based in Newry and Belfast. This marks a major restructuring for FD Technologies, with the sale expected to conclude on Monday. Post-sale, KX will emerge as the sole operating entity under FD Technologies’ umbrella, drastically reducing its scale to approximately 500 employees, including 100 positions in Northern Ireland.

Irenic Capital, based in the United States, stands as the largest shareholder in FD Technologies, holding a 20 per cent stake. The family of the late founder Brian Conlon possesses a 13.4 per cent share. The implications of this sale are significant for KX, which the company describes as a “pure-play, high-growth software business.” Following the transaction, KX will retain £54 million of the sale proceeds, while £32 million will be allocated for debt repayment.

Seamus Keating, the chief executive of FD Technologies, expressed optimism about the future of KX, stating that this transition will enable the company to achieve profitability irrespective of economic fluctuations over the next few years. He emphasised the potential for accelerated growth and the confidence that comes with a strengthened balance sheet.

In a recent release of half-year results, FD Technologies reported a pre-tax loss of £11.1 million for ongoing operations for the six months ending August 31, 2024. The group’s revenue experienced a 7% decline, totalling £118.2 million, contrasted by a 5% increase in KX’s revenue, which reached £39.5 million. Chief Financial Officer Ryan Preston highlighted significant investments in research and development, as well as sales and marketing within KX during this period, affirming the group’s aspiration to achieve cash positivity by 2027.

The financial landscape was further affected by a £1.9 million loss attributed to the former MRP business, which was divested to US-based CONTENTgine in the previous year. Although FD retains a 49% interest in the new entity, trading as pharosIQ, the first-half loss was primarily linked to restructuring efforts and the establishment of a joint venture with CONTENTgine.

Looking towards the future, Ashok Reddy, chief executive of KX, reaffirmed the company’s trajectory as a high-growth operation. Originally a provider of software for real-time decision-making on Wall Street, KX has transformed into a high-performance analytical database and is now integrating generative AI into its offerings. Reddy noted the company’s expansion into new sectors, including aerospace, defence, and high-tech manufacturing, and expressed confidence in pursuing additional verticals through strategic partnerships.

FD Technologies anticipates maintaining a collaborative relationship with EPAM Systems following the sale, underscoring an ongoing connection between the two firms amid significant changes in its operational structure. As FD Technologies prepares for this new chapter, discussions regarding a potential rebranding and strategic direction are likely to take place in the coming fiscal events, with the aim of positioning KX for future growth in an evolving technological landscape.

Source: Noah Wire Services