JTC plc (LON:JTC), the global provider of fund, corporate and private client services, has announced the acquisition of INDOS for a maximum consideration of £12.5m. The initial consideration is £11m which will be settled in cash £10m and JTC equity £1m. A further £1.5m deferred consideration is available to management on the achievement of performance targets.
Background to INDOS
Founded in 2012, INDOS is an industry-leading specialist in the provision of depositary, ESG and AML oversight services for alternative investment funds. As of December 2020, INDOS’ client assets under depositary oversight were c. $35 billion and AML officer clients represented c. $11 billion. INDOS has grown organically since inception and now employs over 50 highly qualified staff across three office locations in Ireland and the UK. It has a high quality, diverse client book of leading UK and international alternative asset fund managers.
INDOS is being acquired from its management team and a group of private shareholders. All employees, including INDOS founder and CEO Bill Prew and his senior management team, will join JTC, becoming part of the Institutional Client Services (ICS) Division. The transaction is subject to FCA regulatory approval and is expected to complete by the end of Q1 2021.
Strategic rationale
INDOS is a leading provider of depositary and other high value services in the fast-growing alternative assets market. This represents an important strategic acquisition, adding complementary capabilities and technical expertise to JTC’s increasingly sophisticated fund services offering. INDOS has invested heavily in its business, building a strong reputation and securing a high quality client base with minimal attrition. The acquisition will create exciting growth opportunities both on a standalone basis as well as for the broader ICS business and enable JTC to better serve its global client base. INDOS directly adds scale in Ireland and the UK, two growth jurisdictions, as well as expanding the Group’s Cayman offering through the provision of AML oversight services.
This is the latest in a series of successful bolt-on acquisitions for the Group, with similar transactions having been completed in 2018 (Van Doorn CFS, corporate services, Netherlands), 2019 (Exequtive Partners SA, fund and corporate services, Luxembourg) and 2020 (NES Financial, fund services and technology, USA).
The acquisition forms part of JTC’s on-going growth strategy, which enhances the organic growth momentum of the core business with disciplined inorganic growth governed by clear acquisition criteria and supported by a strong track record for thorough and successful integration to JTC’s global platform.
Financial benefits
In the financial year ending 31 December 2020 INDOS delivered revenue of c. £3.7m. The business delivered revenue CAGR of over 20% for the 3 year period ending December 2020 and this trajectory is expected to continue over the coming years. By leveraging JTC’s scale, it is expected that INDOS will achieve margins in line with management guidance (33% – 38% underlying EBITDA) in the medium-term. The acquisition will also help to support and drive the ICS Division’s organic growth through the provision of specialist services that are highly complementary to JTC’s existing offering.
The Group continues to see further opportunities for both organic and inorganic growth across its two Divisions, covering a range of service lines and geographies, as it continues to expand its global platform and participate in consolidation within the sector.
Bill Prew, CEO, INDOS, added:
“Having grown organically since 2012, we understand what it takes to create value through building long-term client relationships based on service quality and expertise. We share much of our cultural DNA with JTC and their focus on clients, innovation and technology mean that we are very excited about our future as part of the Group. I am also delighted that all members of the INDOS team will become shared owners of JTC.”
Nigel Le Quesne, CEO of JTC, said:
“INDOS is a business of real quality which operates in a strategically important part of the fund services market. Having collaborated with Bill and the team several times, it is clear that their deep expertise, commitment to service excellence and proven ability to innovate and grow makes INDOS a great addition to the JTC platform. The transaction also adds further scale in Ireland, a priority market for the Group, and the UK, where our London team has more than doubled in size over the last 18 months due to client demand. We offer a warm welcome to our new colleagues and are excited to bring the benefits of the acquisition to existing JTC clients and to providing INDOS clients with an even richer suite of global services and the full backing of the JTC Group.”
