Misys has announced a deal has been reached which effectively moves Sesame, the IFA servicing arm, one step closer to a management buyout.
In a stockmarket announcement issued this morning, Misys says it has agreed to sell a 60% stake in Sesame to Sesame Management - headed by chief executive Patrick Gale - in return for an investment of around £105m in cash and guarantees.
This deal will effectively mean Misys will still hold a 40% stake in the firm at this stage but will no longer be responsible for inputting any additional capital into the firm if needed beyond current regulatory requirements.
Little detail is given at this stage concerning the actual management of the firm, but the statement suggests deferred benefits will be repaid to Sesame within 8-10 years albeit the amount - thought to be up to £90m - is dependent on the future performance of Sesame.
Misys says its loss to annual revenues will be around £350m, and the right-off at this stage is a loss on disposal of £50m, predominantly linked to goodwill.
Officials at Sesame say more information about the financing of the deal as well as the implications for members and clients will be revealed later today.
The statement suggests, however, the aim of the deal is to "maintain the financial and operational stability of the Sesame business whilst enabling Misys to exit its investment in Sesame".
According to financial results published in December, the Sesame network had 3,900 RIs to 30th November 2006 while Sesame Direct had 2,500 members.
Have Your Say: Frank Iredale, IREDALE Financial Advisers, Aylesbury - a Sesame member - says:
My feelings are mixed. I am glad the uncertainty about ownership will be over.
I am sorry to lose the security of Sesame having a financially strong owner, bearing in mind how some networks have struggled and gone have bust on occasions.
Have Your Say: David Noble, says:
Perhaps Sesame's MBO will help remind Sesame that its the ARs who are their customers and not the other way round.A taste of having to compete in the real world will be a good thing for those involved in the MBO, after all businesses that take customers for granted never last the course.
What impact do you think this deal will have on the Sesame operations, its members and business potential?
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Julie Henderson on 020 7034 2679 or email [email protected].IFAonline
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