Sopra Steria is to acquire fellow French core banking vendor SAB as part of a strategy to turn around its underperforming Banking Software division.
Under the proposed transaction, SBS (ex-Sopra Banking Software) would initially acquire a majority stake in SAB and the remaining share capital in a year’s time.
Founded in 1989, SAB has over two hundred references, mostly retail banks. The company generated revenue of €64.4 million in 2018. SAB boasts significant recurring revenue streams: maintenance services and ASP services accounted for 30% and 12% respectively of its 2018 revenue.
The acquisition will strengthen SBS (ex-Sopra Banking Software)’s position in France in core banking software – from where SAB generates two-thirds of its revenues from mid-market clients – and expand its reach in Europe and in Africa.
The deal will also extend SBS (ex-Sopra Banking Software)’s ability to provide core banking services in ASP mode, which is becoming more popular among banks looking for easy-to-install, on-demand solutions that don’t require a big capital outlay.
SAB co-founders Olivier Peccoux and Henri Assaf, will remain in their current roles to support and guide teams through the transition period and beyond.
Sopra Sterai was forced to issue a profit warning in 2018 following the loss of a major commercial opportunity and a slippage in installation timeframes within the Banking Software unit. As a result, the operating margin on business activity of SBS (ex-Sopra Banking Software) was €42m below the previous forecast: around €27m regarding licences and €15m regarding project margin.
Éric Pasquier, CEO of SBS (ex-Sopra Banking Software) believes the deal with SAB will help the business to return to operating profit margins in line with historic performance levels from 2020 onwards.