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SS&C Tech (SSNC) $150mm IPO scheduled for Wednesday March 31 |
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SUMMARY |
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85% of top line revenue is recurring, providing visibility & enabling a high P/E multiple |
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Solid 49% gross margin |
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A way to participate in the improving health of the money management business, worldwide |
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Leveraged buyout taken private in Nov 2005 by the Carlyle Group |
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BUSINESS |
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. For more than 4,500 clients including institutional asset management, alternative investment management and financial institutions
. Automates & integrates trading, modeling, portfolio management, accounting, etc. |
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RECURRING REVENUE
85% of 2009 revenue |
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. Software-enabled services are generally provided under two-to five-year non-cancelable contracts with monthly or quarterly payments.
. Also generates revenues by licensing software to clients through either perpetual or term licenses and by selling maintenance services.
. Maintenance services are generally provided under annually renewable contracts.
As a consequence, a significant portion of revenues consists of subscription payments and maintenance fees and is contractually recurring in nature |
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Revenue retention rates |
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Average revenue retention rates in each of the last five years of greater than 90% on software-enabled services and maintenance contracts for core enterprise products. |
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ACQUISITIONS |
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Since 1995 acquired 29 businesses within its industry. |
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COMPETITION |
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Alternative investments: CITCO Group, State Street Bank and Citi Alternative Investment Services. |
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Asset management: SunGard, BNY Mellon Financial (Eagle Investment Systems) and Advent Software, to smaller providers of specialized applications and technologies such as StatPro, Charles River Development and others. |
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Insurance & pension funds: State Street Bank (Princeton Financial Systems) and SunGard, to smaller providers of specialized applications and services. |
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Real estate property management: Yardi Systems |
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Treasury banks & credit unions: SunGard and Misys |
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Commercial lending: PNC Financial Services (Midland Loan Services), to smaller providers of specialized applications and technologies. |
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Financial markets: SunGard, Fidessa and Cinnober |
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CARLYLE LEVERAGED BUYOUT |
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Nov, 2005 |
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> Carlyle capitalized SS&C Holdings with an aggregate equity contribution of $381.0 million; |
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William C. Stone, SS&C’s Chairman of the Board and Chief Executive Officer, contributed $165.0 million of equity in the form of stock and rollover options |
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> SS&C entered into senior secured credit facilities consisting of: |
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• a $75.0 million revolving credit facility, of which $10.0 million was drawn at closing; and
• $275.0 million term loan B facility, which was fully drawn at closing and of which the equivalent of $75.0 million was drawn in Canadian dollars by one of SS&C’s Canadian subsidiaries;
• SS&C issued and sold $205.0 million in aggregate principal amount of 113/4% senior subordinated notes due 2013; |
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USE OF IPO PROCEEDS |
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$105mm: from sale of 8.225mm shares, shareholders intend to sell 2.5mm shares |
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Up to $71.75mm to repay debt with 113/4% interest, at a redemption price of 105.88% of face value plus interest |
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Balance of for working capital and other general corporate purposes, including potential acquisitions. |
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SS&C Tech (SSNC) |
SSNC, C+, 7 |
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Post-IPO shares: 69mm |
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fin svcs soft |
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Windsor CT |
2006 |
2007 |
2008 |
2009 |
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IPO Mkt |
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Revenue ($mm) |
$205 |
$248 |
$280 |
$271 |
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Cap (mm) |
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Gross profit % |
51% |
48% |
49% |
49% |
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$966 |
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Profit (loss) |
$1 |
$7 |
$19 |
$19 |
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@$14 |
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Profit (loss) % of revenue |
0% |
3% |
7% |
7% |
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VALUATION RATIOS |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
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trailing 12 monts |
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
in IPO |
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SS&C Tech (SSNC) |
$966 |
3.6 |
51 |
1.3 |
-2.8 |
16% |
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SCORECARD |
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Mgt |
Market |
Market Do- |
Proprie- |
Total |
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1-5, 5 is high |
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Growth |
mination |
tary |
rating |
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20 is perfect |
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2 |
2 |
2 |
1 |
7 |
