IT services provider and integrator Cognicase Inc. is attempting to increase its sway in Toronto financial services circles through a summer series of acquisitions, the third of which was announced Monday.
Cognicase will buy out Toronto financial ASP Ezenet for a reported $54 million in Cognicase shares and a cash option to Ezenet shareholders of up to $20 million.
In recent months the Montreal-based company bought Radius Information Systems Ltd., a Toronto integrator specializing in the financial sector and Personus Inc. (formerly Caught in the Web), which specializes in transactional solutions.
Ezenet’s chief financial officer Gary Guthro anticipates his company won’t see any major changes. He does, however, expect some growth in personnel (from a current staff size of 150) due to the take over and an opportunity to make a bigger splash in financial markets.
Affiliation with an international firm like Cognicase (which has offices in Canada, the U.S., Europe and Australia) will add some weight to future ASP offerings, according to Guthro, adding Cognicase brings “a large infrastructure that will allow implementation in bigger banks.”
An agreement with the National Bank of Canada was announced days before the Cognicase buy out, where Ezenet will provide customer software to allow access to retirement income fund and life income fund portfolio information.
Banks are wary of bringing smaller financial software houses to handle more than a portion of their needs, said Guthro, but added the Cognicase name may open some more doors for Ezenet.
Acquisitions of this type are quite common, according to Dana Stiffer, senior financial analyst with Boston-based AMR Research Inc. “There’s a lot of integration service providers that are buying software pieces that specifically address problems in the financial services industry,” she said, though many integrators are choosing to enter financial markets through partnerships with software vendors rather than buying them outright.
Cognicase announced its third-quarter earnings today, highlighting the recent acquisitions as a foray into Toronto finance. Cognicase’s revenue increased to $106.7 million, 46 per cent higher than the same time last year. Cash net earnings held stable – a slight increase from $6.5 million to $6.6 million in the last year.