FD Technologies to sell First Derivatives unit to US group for £230m

Newry-headquartered FD Technologies has agreed to sell one of the core arms of its business to US software company EPAM for £230 million (€274m).
The deal for its First Derivatives division is subject to shareholder approval but is expected to complete in the fourth quarter of 2024. After customary closing adjustments, transaction and separation costs, net cash proceeds are expected to be approximately £205 million.
FD Technologies, formerly known as First Derivatives, is one of Northern Ireland’s biggest home-grown technology businesses. It has more than 1,800 employees and counts the world’s top 20 banks among its customers.
The group was founded as First Derivatives by the late Brian Conlon in his mother’s spare bedroom in 1996, and his family are still significant shareholders in the business. The amount that will be paid to shareholders from the deal has yet to be confirmed.
FD is a London-listed group that provides trading and risk management software systems to some of the world’s largest finance, technology, automotive, manufacturing and energy groups.
EPAM is a digital services and product engineering business that provides cloud and AI-enabled transformation services. Goodbody described it as “an experienced consulting partner for global enterprises and start-ups”.
Among the benefits of the deal cited by FD are that it will enable the company to focus on KX, another arm of the group, which it described as having “the largest value-creation potential”.
KX employs about 500 people and turns over roughly £80 million a year. FD said the deal will provide funding for KX to become cash generative, with the resources to “execute on the exciting growth plan in its target markets”.
The deal will also generate synergies for KX through a partnership with EPAM to provide professional services capabilities in key markets.
Furthermore, the deal is expected to provide a platform for the First Derivative business within a “global professional services company” with the scale and resources to support its growth ambitions.
FD also said the money from the agreement would enable the repayment of the group’s net debt, which amounted to approximately £20 million on August 31st, 2024. The deal will also facilitate the return of excess cash to shareholders.
EPAM said the acquisition will bring more than 100 new clients under its umbrella, offering “unmatched value and setting a new standard for technology services in the financial services industry”.
FD Technologies chief executive Seamus Keating said: “This divestment is positive for all stakeholders, benefiting our shareholders and the customers and employees of KX and the First Derivative business.”
EPAM president of global business and chief revenue officer Balazs Fejes said the deal “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”.
Separately, FD Technologies published a trading update which showed both KX and the First Derivative businesses performed in line with the board’s expectations the first half of its financial year ended August 31st, 2024.
KX delivered annual contract value added of £7.4 million, within the guidance of £6-8 million for the period.
The board reiterated its expectation of a range of £16-£18 million annual contract value added in full year 2025, driving annual contract value growth of 11-15 per cent at constant currency.
“The First Derivative business’ capital markets consulting customers continue to be cautious in their spending, with revenue for the period of approximately £79 million, similar to the second half of its full year 2024,” it said.