Misys shareholder Credit Suisse Asset Management has reacted positively to the group's acquisition o...
Misys shareholder Credit Suisse Asset Management has reacted positively to the group's acquisition of DBS.
Phil Harris, fund manager at Credit Suisse, said: 'Misys traditionally had fairly old-fashioned technology and never spent much on research and development. With the DBS deal, Misys has added to its network and bought some good technology.
'Misys bought it for the software. DBS had run out of steam. It had a very difficult year trading-wise and has a number of potential liability issues with pensions mis-selling, which are reflected in its share price.'
The deal is illustrative of the growing consolidation within the intermediary marketplace. Harris said: 'I think consolidation is very much a developing trend. People are going to congregate more and more as the rising costs of business, such as technology, are stuffing the smaller intermediary.'
Hugh Priestly, chief investment officer at Rathbones, is uncertain how the DBS deal will impact on Misys' growth rate but said its main area of business is software development for the US banking and healthcare sectors.
He had held Misys in the past and is now considering reinvesting in the company.
John Ellis, public affairs director at the Life Insurance Association (LIA), said the proposed merger would not likely be referred to the Competition Commission as media reports had speculated.
Ellis, who worked for the Monopolies and Mergers Commission (MMC) prior to joining the LIA, said the statutory trigger for a proposed deal to be referred to the Commission was when it would result in a single body with 25% of market share.
Even though the Misys/DBS deal made up roughly that proportion of the IFA channel, Ellis said, the Commission would follow the FSA and MMC's lead and look at the combined market share the proposed entity would have of the wider advice market.
Ellis predicted the Commission would not look at the competition effects in terms of the narrow IFA channel but in terms of the entire universe of advice, which includes banks and building societies, sales forces, direct offer, off the page, telephone and internet-delivered advice, and even tied agents.
Following on from its acquisition of DBS, Misys announced that it is to focus on the business to business arena and close down its consumer facing online offerings.
The group has closed two unprofitable websites, screentrade.com, an insurance portal and theformula.com, a financial services portal. It had been looking to either sell the businesses or partner with another company, but failure to do so led to the sites' closure.
Misys said the business to consumer sites had lost the company £19m in the year to end March 2001 and it will take a further one-off cost of £10m to close the sites and cut staffing levels by around 100.
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From 6 April 2019