Finastra, a financial technology company owned by Vista Equity Partners, a global technology investment firm led by Robert Smith, America’s richest Black billionaire, is reportedly considering the sale of its banking unit for up to $7 billion.
Five sources familiar with the matter disclosed on Tuesday that the UK-based fintech company is currently carving out its universal banking business – which provides banks and credit unions with essential software to manage core processes – in preparation for a sale, which is expected to begin in the coming weeks.
The recent move comes on the heels of a string of high-profile acquisitions by its parent company, Vista Equity Partners. These included the acquisition of Avalara Inc, a private firm valued at $8.4 billion, as well as the acquisition of KnowBe4.
Private equity firms and financial software competitors have expressed interest in Finastra’s universal banking unit, which currently generates $1.7 billion in revenue and $500 million in earnings before interest, taxes, depreciation, and amortization (EBITDA).
To further explore its options, the fintech firm hired a financial advisor, and discussions with potential buyers are now in the early stages, with no deal guaranteed.
With more than $50 billion in assets and a yearly return of 22 percent since its inception in 2000, Vista Equity Partners has quickly grown into an industry leader and is one of the most active private equity investors in the technology sector.
Under Smith’s leadership, the firm continues to leverage its cash holdings and the recent drop in the valuation of technology companies to acquire stakes in companies with enormous economic potential.
Vista Equity added 11 new portfolio companies and closed 18 add-on transactions in the first half of 2022 alone across its Flagship, Foundation, Endeavor, and Perennial funds.
Recently, the Robert Smith-led investment firm entered into a definitive agreement to acquire Duck Creek Technologies, an innovative provider of intelligent solutions for the property and casualty insurance industry.
