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Newry founded business FD Technologies have announced that they plan to sell the First Derivative part of the organisation to American headquartered company EPAM Systems. EPAM employ over 65,000 people. Back in 2001 First Derivative was changed to FD Technologies encompassing three businesses First Derivative, KX and MRP. It's not known at this stage if, or how the business deal will affect the company's presence in Newry.
FD Technologies has entered into an agreement to sell the Group’s First Derivative Business to EPAM Systems for an enterprise value of £230m. The deal is expected to be completed in Q4 this year, subject to shareholder approval and other considerations. First Derivatives was founded by Brian Conlon in 1996 with a £5000 loan from Newry Credit Union and the business was one of the largest employers in Newry City in recent years. Sadly Mr Conlon died in 2019.
FD Technologies claim benefits of the deal include, that it will:
- provide the optimal organisational structure and allocation of capital to drive value for shareholders, as determined by the Group’s structure review, announced in March 2024
- enable the Company to focus on KX, the part of the Group with the largest value creation potential, and provides funding for KX to become cash generative, with the resources to execute on the exciting growth plan in its target markets
- achieve an attractive valuation of £230m for the First Derivative Business
- generate synergies for KX through a partnership with EPAM to provide professional services capabilities in key markets
- provide a platform for the First Derivative Business within a global professional services company with the scale and resources to support its growth ambitions
- enable the repayment of the Group’s net debt, amounting to approximately £20m on 31 August 2024
- facilitate the return of excess cash to shareholders, details of which will be communicated at the time of interim results in November 2024.
Speaking on the announcement Seamus Keating, CEO of FD Technologies, said: “This Divestment is positive for all stakeholders, benefitting our shareholders and the customers and employees of KX and the First Derivative Business. For shareholders it enables the Group to focus on KX, and provides the resources to deliver on our exciting growth plans while also enabling us to return excess cash. KX and its customers will benefit from a strengthened and broader partnership with EPAM that opens up opportunities in capital markets and beyond, while the First Derivative Business customers will benefit from EPAM’s scale and reach combined with the deep domain skills in capital markets within the First Derivative Business. We look forward to providing an update on the positive trading performance and strategic progress of KX at our interim results in November.”
Balazs Fejes, President of Global Business and Chief Revenue Officer at EPAM, said: “Bringing together the First Derivative Business and EPAM marks the beginning of a distinctive enterprise that will not only enhance value for our clients but also foster substantial growth opportunities for our teams. Leveraging their strong Business and Technology services heritage, especially in capital markets, allows us to expand our financial services solutions portfolio to our clients, who need to evolve and scale their digital ecosystems, gain greater data insights and enhance operations while minimising risks and maintaining regulatory compliance. And we are enthusiastic about enhancing our partnership with KX, focusing significant resources to strengthen this collaboration.”
FD Technologies has also today, 7 October, released its trading update for the first half of the year. Notably, KX delivered an annual contract value (“ACV”) added of £7.4m, within the guidance of £6m-£8m for the period. It has also reiterated its expectation of a range of £16m-£18m ACV added in FY25, driving ARR growth of 11-15% at constant currency.
Further details on trading in the first half of the financial year will be provided in the Group’s interim results expected to be released in November 2024.
