CEO highlights the group has seen an improved earnings profile
Financial services software group Iress has completed the sale of its UK mortgage sales and originations business to private equity firm Bain Capital Tech Opportunities LP (Bain Capital).
In a Press release, Iress revealed that the transaction, valued at £85 million, was part of its strategy to reduce debt and focus on its core business areas of wealth management, superannuation, and trading and market data.
Initially agreed upon in March, the sale has yielded net proceeds of $147 million for Iress after costs, exceeding the previously anticipated range of $135 million to $141 million. Despite this, Iress shares were trading 1.3% lower at $10.40 in a weak Australian market, as noted in a Capital Brief report.
Iress highlighted that the divestment is the largest it has completed as it continues to streamline its operations. Proceeds from the sale will be used to retire debt and invest in core businesses. Iress aims to achieve a target leverage range of 1x to 1.5x by the end of 2024.
“This is the fourth and largest divestment we have successfully executed under our transformation program,” said Marcus Price, CEO of the Iress’ Group. “As we enter the final months of our transformation program, we can already see a stronger Iress with an improved earnings profile, balance sheet strength and execution discipline priming Iress for future growth.”
“Completion of the sale was contingent on the novation of existing MSO client contracts to the new owners and we’re pleased to have gained the full support of all Mortgages clients,” said Harry Mitchell, group executive for Wealth & UK at Iress. “Iress’ UK operations now have a streamlined focus on its core competencies.”
E&P Capital analyst Olivier Coulon noted that the net proceeds of the divestment were modestly higher than originally guided in March. “The completion of the sale puts Iress in a good position to resume dividends. We have the business returning to declaring dividends at the February 2025 result,” Coulon said in a note to Capital Brief.
E&P Capital maintains a ‘positive’ rating on Iress, with a price target of $11.31 per share.
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