A mature product has a new owner that will either leave it as a standalone offering or integrate it with similar systems.
The Portia middle-to-back office investment operations platform has found a new home with SS&C Technologies, which will soon have to decide whether or not to integrate the mature product with SS&C’s related offerings, say industry observers. One observer even suggests that Portia could become the new flagship offering of SS&C.
The Windsor, Conn.-based SS&C announced yesterday that it has signed a definitive agreement to acquire Portia from Thomson Reuters for $170 million. The acquisition is scheduled to close in the second quarter of this year, pending regulatory approval and customary closing conditions. Thomson Reuters declared last year that it would be selling off its Portia business unit, which Thomson brought with it when it acquired Reuters in 2008.
Analysts say the acquisition appears to be a good match as Portia and SS&C serve the same markets and SS&C is well positioned to advance Portia.
“It was an opportunity for SS&C to continue to build out its entire product line,” says Philip Lawton, a senior analyst with market research firm Aite Group. It’s also an opportunity for Thomson Reuters to part with a mature offering as its shifts it priorities to higher growth segments; Portia is offered via Thomson Reuters’ investment and advisory offerings unit, which has seen demand trail off. “It doesn’t quite fit for where Reuters is going,” he says.
The acquisition will yield more than 140 new staff for SS&C from locations in Boston, Bangalore, London, Hong Kong, Singapore, Dubai, Tokyo and Bangkok, according to a statement from SS&C. The current president of Portia Christy Bremner will remain in her role.
The deal will “significantly” expand SS&C’s offerings, and is likely to add to SS&C’s earnings, says Bill Stone, chairman and CEO for SS&C Technologies. “We have a strong history of acquiring complementary businesses as part of our overall growth strategy and expect this to be accretive in 2012,” Stone says in a prepared statement.
Portia offers middle-to-back office capabilities that allow investment managers to better govern day-to-day activity in their investment portfolios. Portia can be deployed internally at firms or hosted remotely. Its functions include corporate actions processing, internal, client and regulatory reporting, performance measurement and attribution and post-trade compliance.
“From our point of view, there are a lot of Portia clients sitting on the fence, waiting for this decision.”—Jeremy M. Hurwitz at InvestTech Systems Consulting
Jeremy M. Hurwitz, principal and founder of InvestTech Systems Consulting, the Los Angeles-based systems integrator for institutional investment managers says that the acquisition is likely to bring relief to Portia customers that have been “in limbo for three or four years” since the Thomson acquisition of Reuters. Investech has helped deploy Portia and SS&C’s offerings for its clients and knowing that the product was going to be sold caused customers concern about the product’s future, Hurwitz says.
“I think this is good for [customers] one way or another to eliminate some of the unknown risk and mystery here,” Hurwitz says. “From our point of view, there are a lot of Portia clients sitting on the fence, waiting for this decision.”
The acquisition is “probably more positive than negative” because SS&C has shown that it can successfully manage a portfolio of offerings acquired from other companies, Hurwitz says. SS&C will keep the product focused on the buy-side and the acquisition “would certainly present the potential that Portia clients will have an after-life under the SS&C banner.”
The Portia product will fit “fairly well within the SS&C product suite of investment accounting, performance measurement and investment operations,” Hurwitz says. “It’s another product they can leverage and potentially integrate with other aspects of the SS&C family of products.”
Portia will give SS&C investment advisory, operations and accounting capabilities that “are at par or slightly ahead of some of the tools that they’ve got today in their arsenal,” Hurwitz says. For SS&C, “it will allow them to leverage their tangential products off of a core accounting platform.”SS&C is likely to leverage its performance measurement product Sylvan, its reconciliation offering and client reporting tools. “All of them would be excellent add-ons to the Portia model,” Hurwitz says.
For now, there is an overlap between Portia and SS&C’s products, particularly between Portia and SS&C’s Camra for investment accounting and regulatory reporting, Lawton says. There is also some overlap between Portia and Sylvan.
“Portia brings the corporate actions processing and trade settlement,” Lawton says. “It will be very interesting to see how SS&C proceeds to integrate Portia into its business and take advantage of its strengths.”
As SS&C ponders its next move for Portia, the vendor has to decide if Portia is “the horse SS&C is willing to bet on, re-invest in and put R&D into,” Hurwitz says. “Or is it really another product in the arsenal that brings in recurring revenue?”
Renewed investment could lead to a new role for Portia, Hurwitz says. “Is this going to become SS&C’s flagship investment accounting product?”
In the meantime, SS&C is likely to keep an eye on the installed base.
“Portia is being kept intact so it will have the same staffing and capabilities to take care of its customers,” Lawton says. “I’m sure they will be extremely attentive to customer concerns during this transitional phase.”
SS&C officials did not respond to multiple requests for comment.
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