Iress completes sale of UK mortgages unit to Bain Capital
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The news: Financial services software group Iress has completed the sale of its UK mortgage sales and originations business to private equity firm Bain Capital.
The numbers: Iress agreed to sell the business in March for 85 million pounds ($167 million). It said on Friday net proceeds after costs are expected to be $147 million, slightly better than the $135 million to $141 million range outlined earlier.
Iress shares were trading 1.3% lower at $10.40 in a weak Australian market.
The context: The sale is the largest completed by Iress as part of its strategy to cut down debt and focus on core areas in wealth, superannuation and trading and market data.
It follows the divestment of the managed funds administration (MFA), platform and OneVue businesses. Proceeds from the sale of the business, which Iress acquired more than a decade ago, will be used to retire debt and invest for growth in core businesses.
The market data provider said it expects to achieve its target leverage range of 1x to 1.5x by the end of 2024. Last month, it flagged a jump in first-half earnings on the back of improved performance in its core businesses.
E&P Capital analyst Olivier Coulon said the net proceeds of the divestment were modestly higher than originally guided in March, and coupled with modestly favourable forex movements, would see the company receive $147 million.
E&P holds a ‘positive’ rating on the company with a price target of $11.31 a share.
What they said: “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.
The sources: ASX announcement, E&P Capital research
