In an ASX announcement on 2 August, the financial services software provider confirmed it has sold its UK mortgages business to Bain Capital Tech Opportunities LP for a total cash consideration of £85 million ($167 million) before costs.
Net proceeds from the sale are expected to be approximately £75 million ($147 million) and Iress will provide support services for up to 12 months following the transaction on a cost recovery basis to ensure a smooth transition.
The sale was first announced earlier this year on 15 March, with Iress having acquired the UK mortgages business over 10 years ago, during which time it has become a leading provider of mortgage sales and origination software (MSO) to banks and building societies in the UK.
According to Marcus Price, Iress group CEO, the completed sale marks the fourth and largest divestment the firm has successfully accomplished under its transformation program.
The previous three sales include Iress’ managed funds administration business, its Pulse portfolio management software and, most notably, its platforms business which was successfully sold to Praemium in April. These divestments are part of Iress’ strategy of simplifying its operations and divesting non-core businesses to retire debt.
“The net proceeds of all divestments have been used to retire debt, with our debt to leverage ratio seeing considerable improvement – paving the way for a return to maintainable dividends,” Price said.
“As we enter the final months of our transformation program, we can already see a stronger Iress with an improved earnings profile, balance sheet strength and execution discipline priming Iress for future growth.”
Harry Mitchell, Iress’ group executive for wealth and UK, said the divestment will enable Iress’ UK operations to streamline its focus on core activities.
“Completion of the sale was contingent on the novation of existing MSO client contracts to the new owners and we’re pleased to have gained the full support of all mortgages clients. We are confident this is a great result not only for Iress, but also for our clients and people, with Bain Capital fully committed to reinvesting in the technology and capabilities that power MSO.
“Iress’ UK operations now have a streamlined focus on its core competencies, and we remain committed to driving excellence for our clients in the UK,” Mitchell said.
