KRM22 plc
("KRM22", the "Group" or the "Company")
Acquisition of Object+
KRM22 plc, (AIM: KRM) the technology and software company focused on risk management in capital markets, is pleased to announce that it has entered into an agreement to acquire Object+ Holding B.V. ("Object+") (the "Acquisition"). Completion of the Acquisition is expected to take place within three Business Days of the date of signing the agreement.
Object+ is a risk management and post-trade services technology business focused on capital markets. Object+ is headquartered in the Netherlands with offices in Amsterdam and Chicago. The Acquisition is in line with KRM22's investing policy and strategy and complements the capital markets technology already available on KRM22's Global Risk Platform.
Background to the Acquisition
Object+ provides market risk management technology that includes real-time Profit and Loss ("P&L") and margin management as well as pre-trade order limit management ("OLM"). Object+'s post-trade processing services support "gateways" or connections to over 30 exchanges across the globe. Object+ provides these products and services to banking and trading customers based in Europe, North America and Asia.
The CEO, Martin van Aalderen, has over 20 years' industry experience and joined Object+ in 1999. He will remain with the KRM22 Group as Managing Director - Market Risk.
Benefits of the Acquisition
KRM22 already offers post-trade market risk solutions through previous acquisitions and partnerships. The acquisition of Object+'s technology products will expand KRM22's market risk solutions to pre-trade and at-trade with direct connectivity to major global exchanges. In particular, the Acquisition will bring to KRM22:
· The ability to share data between systems and for customers to remove the need for reconciliations, thereby reducing the cost and complexity of their risk management;
· A team of subject matter experts in real-time trade processing;
· A complementary customer base; and
· Additional cross-selling opportunities for KRM22.
Acquisition Financials
Object+ is currently generating $1.1m (£0.9m) annualised revenue with circa 50% from recurring contracts with eight institutional customers. The business made a small loss of approximately £50k in the 2018 financial year.
The initial consideration for the Acquisition is $1.15m (£0.9m) with $0.5m (£0.4m) payable in cash and $0.65m (£0.5m) through the issue of 606,909 new ordinary shares of 10 pence each in the Company ("Ordinary Shares") at the price of 85p (being the placing price of the fundraising announced on 3 April 2019) (the "Initial Consideration Shares"). The deferred consideration is a maximum of $2.75m (£2.2m) payable in three tranches subject to earn-out conditions based on the growth of annual recurring revenue of Object+'s products and services. The deferred consideration can be satisfied in either cash or shares at the Company's discretion with the number of consideration shares to be determined based on the value weighted average closing price for the 60 consecutive trading days prior to the day of each issue of shares. Together, the initial and growth-based deferred consideration is limited at a maximum of $3.9m (£3.0m).
Admission of the Initial Consideration Shares is expected to become effective within four business days of completion of the Acquisition ("Admission"). A further announcement will be made when the Acquisition has closed and the Initial Consideration Shares have been allotted. Following Admission, KRM22 is expected to have 18,866,969 Ordinary Shares in issue. All Ordinary Shares have equal voting rights and none of the Ordinary Shares are held in treasury. The total number of voting rights in the Company immediately following Admission is therefore expected to be 18,866,969.
Keith Todd, Chairman and CEO at KRM22, commented:
"I am delighted to welcome the Object+ team to KRM22. This acquisition will be a further strategic step towards the development of our Global Risk Platform, bringing strong post-trade execution and market gateway expertise which is complementary to our existing market risk offering. Our focus is to provide applications which help our customers reduce the cost and complexity of risk management at their firms and believe that this acquisition will help us to build even greater momentum in the market."
Martin van Aalderen, CEO at Object+, commented:
"The idea of bringing a unified global risk management platform to capital market's companies is one that our industry has been waiting for. The success that KRM22 has had in bringing this to market in just one year of operations is incredibly impressive. Our employees, shareholders and clients are excited to be part of that initiative as we bring our pre-trade and post-trade risk products and services to KRM22's Global Risk Platform."
For further information please contact:
KRM22 plc [email protected]
Keith Todd CBE, Executive Chairman and CEO
Karen Bach, COO
finnCap Ltd (Nominated Adviser and Broker) +44 (0)20 7220 0500
Carl Holmes / Kate Bannatyne / Matthew Radley (corporate finance)
Alice Lane / Sunila de Silva (ECM)
The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.
About KRM22 plc
KRM22 is a closed-ended investment company which listed on AIM on 30 April 2018. The Company has been established with the objective of creating value for its investors through the investment in, and subsequent growth and development of, target companies in the technology and software sector, with a focus on risk management in capital markets.
Through its investments and the Global Risk Platform, KRM22 helps capital market companies reduce the cost and complexity of risk management. The Global Risk Platform provides applications to help address firms' regulatory, market, technology and operations risk challenges and to manage their entire enterprise risk profile.
Capital markets companies' partner with KRM22 to optimize risk management systems and processes, improving profitability and expanding opportunities to increase portfolio returns by leveraging risk as alpha.
KRM22 PLC is listed on AIM and the Group is headquartered in London, with offices in several of the world's major financial centres.
See more about KRM22 at KRM22.com.
