Fenergo is close to securing a $75 million investment from private equity firm Insight Venture Partners. The transaction is expected to close in the next few weeks and will give Fenergo the financial strength to work with the world’s largest banks as well as funds to invest in its client lifecycle management solutions, develop a partner programme, and add regional offices and staff to its existing footprint.
Marc Murphy, Fenergo CEO, and his executive team met towards 20 private equity firms interested in investing in the company and carried out a selection process that shortlisted first four and then two potential investors before concluding that New York based Insight Venture Partners, a private equity firm investing in high-growth technology and software companies, was the best fit.
Murphy explains: “The investment is the result of inbound interest in the company and the market telling us that Fenergo has a great technology asset, but needs a strategic backer. While we have achieved 100% revenue growth year on year over the past three years to reach revenue of €20 million in 2015, the largest banks wouldn’t do business with us because of the size of the company. To win them we needed more fire power on the balance sheet and that is what Insight Venture Partners will give us.”
As well as financial strength and increased credibility, Murphy hopes the investment will give Fenergo an opportunity to make its client lifecycle management and regulatory onboarding solutions de facto industry standards. He says: “Our competitors offer large banks workflow tools for regulatory client onboarding and lifecycle management, but these tools will become irrelevant as Fenergo addresses the data management challenges of onboarding and lifecycle management with solutions that centralise client and counterparty data to support regulatory compliance, onboard clients quickly and efficiently, and ensure legal entity compliance through a client’s lifecycle with a bank.”
The Insight Venture Partners investment in Fenergo will be used to accelerate development of the company’s platform, which supports hundreds of regulations across 27 countries, and to grow its global footprint. Fenergo employs 140 people across its headquarters in Dublin and offices in London, New York, Boston, Sydney and Wroclaw. It now intends to add 100 staff, including design engineers, regulatory specialists and sales people, to its team, as well as offices in Toronto, Stockholm, Singapore, Tokyo and Abu Dhabi over the next few months.
The company also plans to build a partner ecosystem and will establish Fenergo University and a Consulting Accreditation Programme that will extend its market reach through the deployment of its products by consultancies, systems integrators and integration partners.
Focusing on how Fenergo will develop its platform, Murphy says the company is looking to add more sophisticated tools to the process of client onboarding, Know Your Customer reviews, Anti-Money Laundering checks and offboarding. Initial plans will add auto discovery of entities’ ultimate beneficial owners. This data will be included in the platform’s central database, avoiding the need to gather and manage the data manually, and will be used to validate existing data and generate exceptions. To support the auto discovery of ultimate beneficial owners, Fenergo has integrated its platform with entity data services from a number of companies including Dun & Bradstreet, Bureau van Dijk, FircoSoft, World-Check, Omgeo and Avox, allowing banks to select the services they want to use. Fenergo is piloting the solution with a Swiss investment bank and expects to release a production version in September.
Fenergo’s customers to date include Barclays, Scotiabank, Bank of Montreal, State Street, SunTrust and Royal Bank of Canada. Murphy expects the Insight Venture Partners investment to help the company win contracts with more tier one banks and says Fenergo is close to concluding a deal with the UK’s largest bank, which will roll out its solutions across 40 countries. With a focus on sell-side markets, the company is also looking at a move into buy-side markets and potential sales opportunities at regulatory organisations.
On behalf of Insight Venture Partners, managing director Peter Sobiloff, says: “Fenergo is an organisation with a leading brand, product and management team. We are pleased to partner with the company’s team in order to achieve continued growth and innovation in the client lifecycle management solutions market.” As a result of its investment, Insight Venture Partners will have two non-executive directors on the Fenergo board who will help the company build out the business. Longer term, the private equity company is expected to support Fenergo in going public in the next three to five years, at which point its job will be done. The original backer of Fenergo, Irish IT consulting company Ergo Group, will make its final exit from the company when the investment transaction is complete, leaving ownership of the company in the hands of Murphy, his executive team and Insight Venture Partners.