StatPro is exchanging its existing StatPro Seven compliance module (SPC) licence contracts for a 51% stake in InfoVest Consulting. StatPro Seven is StatPro’s legacy traditional software platform. While most of StatPro Seven’s modules are migrating to the Revolution cloud platform, StatPro had no plans to upgrade SPC functionality to the cloud. Nevertheless, the SPC module has a distinct market niche, and given InfoVest's specialist skillset, it makes sense for StatPro to transfer the development, support and sale of the product to InfoVest. Further, InfoVest will have access to StatPro's global client base to help grow SPC's sales (we understand an ARR of c £500k). Additionally, InfoVest brings to StatPro standardised data solutions that will be particularly useful for the process of streamlining customer data in the implementation of cloud transition contracts.
InfoVest is a South Africa-based software provider, specialising in data warehouse, ETL (Extract, Transform and Load) and reporting software for the asset management industry. InfoVest has partnered with StatPro for more than two years, providing support for all StatPro’s outstanding StatPro Portfolio Control (SPC) contracts. SPC, which is StatPro’s compliance solution, ensures that customer’s portfolios are within predetermined parameters, such as the percentage that can be invested in specified asset classes. These parameters can relate to regulatory or inhouse criteria and the solution is separate to StatPro’s risk solution. While SPC could transition to the cloud, this has not been on StatPro’s R&D roadmap. InfoVest generated revenues of c ZAR18m (c £0.76m) in the year to 28 February 2015, including £0.13m revenue from supporting SPC. The business is profitable, so we would expect it to modestly boost StatPro’s EPS.
StatPro will consolidate the entire revenues of InfoVest, which will mean a small boost to StatPro’s revenue and pre-tax profit lines, with a deduction from earnings through minority interests. Since the acquisition is small, we have not updated our forecasts at this stage, and will review them after the final results on 9 March.
StatPro’s stock trades on c 30x our FY15e EPS, which falls to c 25x in FY16e. Alternatively, the shares trade on c 1.6x FY16e EV/sales, one-third of the level of StatPro’s larger US peers, which typically trade above 4.4x EV/sales, while USbased pure SaaS companies typically trade at in the region of 2.4-4.6x EV/sales.