By Amy-Jo Crowley, Emma-Victoria Farr and Andres Gonzalez
LONDON/FRANKFURT (Reuters) -Financial software company Finastra is exploring a sale of its Middle Eastern and Asian core banking unit, two people familiar with the matter said, in a deal that could fetch more than $1 billion.
The London-based company, owned by private equity firm Vista, is working with financial advisers at Arma Partners as it prepares to launch a sale later this year, the sources said.
The unit, which provides software to banks and credit unions to run core processes, is expected to generate $100 million in earnings before interest, taxes, depreciation, and amortisation (EBITDA) this year, the people said.
A sale is expected to draw interest from other private equity firms, as well as rivals in the financial software space, one of the people said.
The sources, who requested anonymity because the matter is confidential, cautioned that the discussions are at an early stage and that no deal is guaranteed.
Vista declined to comment. Finastra and Arma Partners did not immediately return requests for comment.
It would be the latest financial services business to hit the block if it goes ahead, following companies such as Hg’s financial data firm FE fundinfo or the sale of Calastone to SS&C Technologies in July.
Global M&A reached a $2.6 trillion peak in August, the highest for the first seven months of the year since the 2021 pandemic-era, buoyed by a quest for growth in corporate boardrooms and the impact of a surge in AI activity.
Finastra was created in 2017 by Vista, which took Canadian payments technology provider D+H Corp private in a 4.8 billion Canadian dollar ($3.5 billion) deal, merging it with Misys, a banking and capital markets software business that it owned.
The sale would follow a divestment of Finastra’s Treasury and Capital Markets (TCM) division in May to Apax Partners, which it used to fully repay debt, according to a report by rating agency Fitch.
Finastra would also use proceeds from that sale for acquisitions to accelerate growth or for dividends to Vista, the report said.
Finastra recently announced a strategic collaboration with a subsidiary of Circle Internet Group to allow banks to settle cross-border payments faster using Circle’s USDC stablecoin.
(Reporting by Amy-Jo Crowley and Andres Gonzalez in London and Emma-Victoria Farr in Frankfurt; Editing by Anousha Sakoui)
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