Legal & General Investment Management’s (LGIM) selection of Misys Sophis Value to manage trading and risk across its fixed income and liability driven investment businesses could be a game changer for both parties as LGIM acquires a long-term technology partner and Misys builds business on the back of one of the largest deals it has ever made on Sophis Value.
LGIM is one of Europe’s largest institutional asset managers and is an investor in global fixed income markets as well as a provider of index tracking strategies and liability driven investment solutions. Its use of Misys Sophis Value to address enterprise portfolio and risk management requirements will replace and rationalise existing vendor and in-house developed systems, and provide the firm with a solution that can extend to meet its needs going forward.
Simon Thompson, chief opeating officer at LGIM, explains: “We chose Misys because it is able to provide a solution that matches the unique needs of a global fixed income manager, including capabilities to support our liability driven investment strategies. The functionality of Sophis Value and the team’s understanding of our requirements gave us the confidence to select Misys as our long-term partner.”
LGIM has started to scope and resource the Sophis Value project using in-house expertise as well as Misys and third-party consultants. It will develop two versions of the solution to support the slightly different requirements of the US and European markets it works in, and expects to complete the project in a year or so.
LGIM’s decision to use Misys Sophis Value was made, in part, on the breadth of the software’s instrument coverage, which includes liability driven investments that are not a core capability in many vendor investment management solutions. It may also have been made, in part, on Misys’ commitment to develop the product and its buy-side business.
Tim Green, general manager, buy side, at Misys, says: “Typically, Misys Sophis Value has been perceived as a best-of-breed analytics product, not as an enterprise system. This deal changes that perception and shows that a big asset manager can use the software to manage everything from large instrument sets to performance, compliance and risk. This is transformational for Sophis and Misys as they will get more recognition in the enterprise space.”
While Green was not central to the LGIM deal as he didn’t join Misys until 1 October 2013, he will be central to the development of Sophis Value and the company’s buy-side business. Previously at Charles River for a year and before that at SunGard for eight years where his last role was to run the company’s alternative investment business, Green was headhunted by Vista Equity Partners, the firm that acquired Misys and merged it with Turaz, the former Thomson Reuters Trade and Risk Management business, back in June 2012.
Green’s mandate at Misys is to triple the company’s buy-side business revenue and grow its customer base commensurately in three years. To do this, he plans to invest in Sophis Value and enhance the product through both in-house development and acquisition.
He explains: “We have already taken on a significant number of new developers and ramped up our support and professional services teams. I am looking for acquisitions that will add strategic pieces to Sophis Value, perhaps a rapid development framework. I am also looking for acquisitions that are not related to Sophis Value but are on the buy side, perhaps private equity or wealth management solutions.”
The three-year roadmap will look at regional development as well as product development. While Green’s focus remains on North America and Europe, he is also pursuing growth in the emerging markets of South America, where Misys already has footholds in Mexico and Brazil, and in South Africa. China and India are not out of scope, but as he builds a regional development plan, Green acknowledges that it is easiest to gain traction where the company already has clients and is recognised.
With about 90 buy-side clients already using Sophis Value – a total of nearer 125 use the software when sell-side clients are included – Green has got his work cut out, but he suggests that unlike many private equity firms that acquire businesses, cut costs, pay down debt and exit, Vista Equity Partners consolidates best practices and processes across its portfolio, and will invest to maximise the business and make money before selling.
He concludes: “We are taking the buy side seriously. I have a big mandate and Misys wants to be a big player in this space. The LGIM deal really helps and shows we are a player in asset management and not just a provider of a best-of breed analytics and fixed income platform.”