OVUM. Angel Dobardziev
This is a major deal for Xchanging, and an addition to its £100m+ relationships with Aon, BAE Systems, Boots and United Biscuits. It also comes 12 months after it signed the deal with Aon, which means that management is beginning to deliver on its promise to reduce the time between mega-deals to below 18-24 months as it was previously.
This deal adds further weight to the gain-sharing BPO partnership model which Xchanging favours, where the supplier and the client share equity stakes in the spun off operations, and share the gains of any improvements. As in the Aon deal, there are plans to open the processing platform to the rest of the market.
There was some talk of a slight 'pause' in the BPO market earlier this year after a selection of BPO deals ran into execution challenges, and clients become more wary of the risks. Every client is different in some way, and no single BPO model suits every client and vendor. But Xchanging's approach, where ownership, risk and gains are more evenly shared between both sides (particularly at the early stages of the relationship) when it is offered by a provider with a sound track record, does go a long way to address a considerable number of client concerns.
Allianz Global Investors and Xchanging plc announce a Retail Investment
22 August 2007
Account Management Partnership
Frankfurt, August 22, 2007.
Allianz Global Investors Kapitalanlagegesellschaft mbH and Xchanging, the international, pure play BPO company, have signed contracts to establish an enterprise partnership to provide retail investment account management services. Subject to competition clearance, Xchanging, through it’s Financial Markets business, will hold a 51 percent share in the Hof-based Fondsdepot Bank GmbH and will take over the operational control of this unit effective from 1 November 2007 at the latest.
Third party growth prospects for Fondsdepot Bank partnership and trend towards outsourcing
The strategic goal of the partnership is to strengthen and grow the position of Fondsdepot Bank as the high-capacity, neutral provider in retail investment account management and to generate third-party business for the cost-effective platform. The partners will focus on expanding their business with independent financial consultants and broker pools and on exploiting the business potential arising from the growing trend towards the outsourcing of administrative processes.
Benefits for both partners
The partnership will provide Allianz Global Investors with guaranteed cost savings through a multi-year service agreement with clearly defined service targets.
"With this partnership we are offering exciting future prospects for both Fondsdepot Bank and the operations in Hof. Moreover, we are leading the way for the consolidation of an essential part of the asset management value-added chain", Dr. Thomas Wiesemann, CEO of Allianz Global Investors KAG, comments.
The partnership endorses Xchanging’s strategy as an international pure-play BPO company and brings a modern technology platform for retail investment account management services. Furthermore, it allows Xchanging to enter the European growth market of asset management and gives the outsourcing specialist the scale to provide new customers with attractive retail investment account management services to add to those offered in securities processing.
David Andrews, Xchanging CEO said, "we are delighted to partner with such a prestigious international organisation as Allianz Global Investors. This, together with our other partnerships signals our leadership in processing for the financial services industry."
As a result of the partnership with Xchanging, Fondsdepot Bank will gain additional momentum in the areas of process optimisation and efficiency improvement. This will significantly increase Fondsdepot Bank’s productivity. The partners stress that operational stability during the transition phase is assured as the business will remain on the same secure platform. With continuity of both management and staff, the Fondsdepot Bank customers will see continued high levels of service standards.
Enterprise Partnership contract details:
The arrangement is based on Xchanging’s unique "Enterprise Partnership" model, designed to reduce the risk of and increase the value of large scale complex outsourcing, through an open book partnership.
The 8 year service agreement has an initial contract value of €400m. Supporting this, Xchanging, through it’s Financial Markets business, will acquire 51% of Fondsdepot Bank for a cash payment of €13m and has granted a put option to Allianz Global Investors for the remaining 49% for €13m exercisable after 4 years. At 31 December 2006 the net assets of Fondsdepot Bank were €26m and the gross assets were €38m. At completion there is expected to be in excess of €10m cash in the balance sheet. This is an important investment for Xchanging to extend its balanced onshore/offshore strategy with a high quality, near-shore facility in Hof. Fondsdepot Bank is regulated by the Bundesbank and BaFin, has a partial banking licence and employs more than 400 people.
Xchanging is a fast-growing international, pure play business process outsourcing company providing complex industry specific processing to the banking and insurance industries such as securities processing, commercial insurance premiums and claims processing. We also provide procurement, finance and accounting, and human resources services to customers across industries. www.xchanging.com
About Fondsdepot Bank
Fondsdepot Bank GmbH which emerged from GKS Gesellschaft für Kontenservice in 2003, provides retail portfolio management and administration services on an open fund platform to investment companies, distribution companies, banks and other businesses. With some 1.3 million active securities accounts and an asset volume under management adding up to € 19.2 bn, Fondsdepot Bank is one of the leading providers in the area of retail investment account management in Germany and offers its customers a portfolio adding up to some 6,500 public funds of more than 150 investment companies. Fondsdepot Bank which employs more than 400 staff, is regulated by the Bundesbank and BaFin, and has a partial banking licence.