Intertrust acquires Viteos - 18 June 2019
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Intertrust acquires Viteos Accelerating our strategy to become a global leader in tech-enabled Corporate & Fund Solutions 18 June 2019
Today’s presenters
Stephanie Miller Hans Turkesteen Shankar Iyer Chitra Baskar
Chief Executive Officer Chief Financial Officer Chief Solutions Officer Global Head of Transformation &
Operations
(Co-founder and Chief Executive (Co-founder and Chief Operations
Officer of Viteos) Officer of Viteos)
2
Intertrust has acquired Viteos
Acquisition of 100% of Viteos for $330m(a) in cash
Bi-laterally negotiated transaction
Funded through internal resources and new debt
Completed on 17 June 2019, following receipt of regulatory approvals
Viteos co-founders and key employees committed and re-investing 35% of their
after-tax proceeds in Intertrust shares
(a) €294m at closing EURUSD FX rate of 1.12 as of 14-Jun-19
3Acquisition highlights
Competitive game-changer for Intertrust accelerating higher growth
Gain meaningful presence in US, increase Funds, and accelerate our growth potential
1 Strong strategic Leverage Viteos' digitalisation and automation technology for incremental revenue growth and efficiencies
rationale
Build on Viteos' offshore Centres of Excellence to deliver estimated $22m (a) annual net run-rate cost synergies
Trusted technology outsourcing partner with professional relationships between teams spanning >10 years
2 Strong alignment to Management equity re-investment of c.35% of after tax proceeds (c.$11m, phased 3 year lock-up)
drive integration
Detailed integration plan developed by Intertrust, Viteos and expert offshoring consultancy
8.0x FYE Mar-19 EBITDA including net run-rate cost synergies
3 Attractive value ROIC > WACC by CY Dec-21(b), double-digit ROIC by CY Dec-22
creation
Mid single-digit EPS accretion in 1st full year of ownership(c), double-digit by CY Dec-21(b)
Financed by new TLA of $150m plus cash, RCF drawdown and equity re-investment
4 Sound financing c.4.1x leverage ratio(d) at closing, strong cash generation expected to drive leverage ratio toAccelerates our strategy to become a global leader in
tech-enabled Corporate & Fund Solutions
2015 €345m Revenue 2018 €496m Revenue Today €543m Revenue(a)
Americas: n/a Americas: 16% Americas: 23%(b)
Funds: 23% Funds: 34% Funds: 40%(b)
3-5% growth(c) Technology
4-6% growth(c)
Tech-enabled Corporate &
Pureplay T&CS(d) Expert administrative services
Fund Solutions
(a) Illustrative revenue (Dec-18 Intertrust + Mar-19 Viteos, see p19)
(b) Illustrative split based on LTM Mar-19 for Intertrust and Viteos (see p8)
(c) Guidance for medium-term underlying revenue growth year-on-year
(d) Trust & Corporate Services 5
Note: Viteos financials converted at closing EURUSD FX rate of 1.12 as of 14-Jun-19Viteos: Leading-edge Technology Solutions for US Funds
Supported by offshore Centres of Excellence
Viteos delivers end-to-end middle and back office administration services for Hedge Funds,
Private Equity, Real Estate, Private Debt and other alternative asset managers
Footprint and employees Unique appeal
Global Leader in Top 10 in
Shadow Admin(c) US Fund Admin
Leadership positions
US: APAC/Europe:
94% of 6% of
Revenue(a) Revenue(a) $350bn AuA(d) >80 Top Tier clients
HQ: New York
Centres of Excellence
c.715 employees Blockchain Workflow automation
(>130 tech employees focused on Bangalore, Chennai
development and innovation) and Mumbai Leading-edge technologies
Founded in 2003 by Shankar Iyer Digitalisation/
RPA(e)
and Chitra Baskar(b) OCR(f)
(a) Based on FYE Mar-19 revenue; FTE split c.3% US, c.97% India (d) AuA = Assets Under Administration
(b) Owned by Public Pension Capital, FiveW Capital and Management (e) RPA = Robotic Process Automation
(c) Shadow Administration = services provided to fund managers (as opposed to the fund) (f) OCR = Optical Character Recognition
6Strong financial track record
Double-digit organic growth with strong margins
FYE Mar-19 Revenue split Revenue ($m, FYE-Mar) EBITDA ($m, FYE-Mar)
APAC/Europe >90% of Mar-
6% 20E revenue
covered by 19.1
order book
$52m 52.4
41.1 14.1
US
35.3 12.8
94%
36.6%
Private Debt 36.2% 34.2%
12%
(a)
PE/RE
14% Mar-17 Mar-18 Mar-19 Mar-17 Mar-18 Mar-19
$52m
Hedge Fund
Other funds 56%
New customer wins Investment in Technology opex to
18% drive growth during FYE Mar-18
Increased share of customer wallet
(a) Private Equity / Real Estate
EBITDA margin (%)
Note: Viteos fiscal year running from 01-Apr to 31-Mar; margin and CAGR may be subject to rounding differences; figures shown on an IFRS-adjusted constant currency basis
71 Strong strategic rationale
Gain meaningful presence in US, increase Funds
Increased exposure to higher growth markets
Intertrust(a) Intertrust + Viteos (illustrative)(b)
23%
16%
Americas
(4 – 6% annualised
market growth)
40%
Funds 34%
(7 – 9% annualised
market growth)
Source: External market studies
(a) Mar-19 LTM split for Intertrust
(b) Mar-19 LTM split for Intertrust and FYE Mar-19 for Viteos
Note: Viteos financials converted at closing EURUSD FX rate of 1.12 as of 14-Jun-19 81 Strong strategic rationale
Accelerate our growth potential
>€3.5bn expansion into higher growth (>7%) adjacencies
New client segments: Hedge Funds, Hybrid Funds and other alternative
asset managers
New specialised services: End-to-end administration for alternatives
market including middle office and back office administration, and
technology solutions
>€3.5bn >€10.0bn
(>7% annual
€6.5bn growth)
(4-6% annual
growth)
(3-5% annual
growth)
(a)
Intertrust stand-alone market Expansion through Viteos Combined market potential
Source: External market studies and management estimates
(a) As defined in 20 September 2018 Capital Markets Day
91 Strong strategic rationale
Increased revenue growth guidance to 4-6%
Further long-term potential through cross-sell/up-sell and technology innovation
Current Viteos Increased
Intertrust impact medium term
medium term guidance
guidance
+c.1% 4 – 6%
3 – 5%
Further long-term
potential
Cross-sell and up-sell
Double-digit growth track record revenue synergies
Increased exposure to higher Technology-enabled
growth Funds and US markets innovation and addition of
new services for existing
>€3.5bn market potential
and new clients
expansion into higher growth
adjacencies
Underlying revenue growth (Y-o-Y)
101 Strong strategic rationale
Leverage Viteos' digitalisation & automation technology
Significant long-term potential for incremental revenue growth and efficiencies
Capital Markets
Blockchain
Automation
Fund
Fund Accounting
Accounting
Payment Transaction
Processing monitoring
Payment Transaction Next AML/KYC
Processing monitoring Gen Utility
RegTech AML /
Client IRIS KYC
onboarding
AML /
KYC Treasury
Management
Client
onboarding
Treasury Web portal
Management technology solutions Outsourcing
Manually intensive + SOC2, connected and automated solutions
Note: AML = Anti-Money Laundering, KYC = Know Your Customer,
RegTech = Regulatory Technology, SOC2 = Service Organisation Control 2 IRIS 111 Strong strategic rationale
Enhanced client solutions
Improves speed, quality and breadth of services and solutions
Technology benefits Funds Full end-to-end capability
Advanced technology with
diverse deployment options
Client-centric solutions and
innovation from additional Our clients Enhanced sub-services
technology developers (>130) Corporates (e.g. payments)
Data analytics, shared
environments and high
transparency
Private debt/ credit
Centre of Excellence Capital
expertise and post-
benefits Markets transaction lifecycle
Centralisation and standardisation
improving quality of service
Enable 24 hour client support
Private Access to broader, more
SOC2 certified Wealth global service offerings
Seamless delivery enhancing broader solutions
121 Strong strategic rationale
Build on Viteos' offshore Centres of Excellence
$22m net run-rate cost synergies expected
Annual cost synergies – EBITDA Centralisation / Standardisation / Shared Services
impact ($m) through offshoring of selected support functions
for client-facing teams, back office and IT support
40 Cost
Sources
synergies India Centres of Excellence will balance existing
jurisdictions and enable 24 hour support for our
clients, improving the efficiency and quality of our
services
22
c.90% net run-rate delivered by CY Dec-21
Timing c.20% net run-rate delivered by CY Dec-20 given
(18) some duplication of recurring cost base to ensure
smooth transition
Aggregate one-off costs of c.$30m
CostTuning
to deliver - Largely P&L cost (c.$5.5m capex)
Gross Recurring Net - Peak in CY Dec-20
Run-rate Opex to Run-rate
achieve
Note: Based on closing EURUSD FX rate of 1.12 as of 14-Jun-19
132 Strong alignment to drive integration
Strong alignment to drive integration
Detailed plan developed by Intertrust, Viteos and an expert offshoring consultancy
Aligned interests Detailed integration plan
Viteos is our trusted technology outsourcing partner Developed by Intertrust, Viteos and an expert offshoring
consultancy
Professional relationships between teams span >10 years
20 workstreams mapped out – preparation completed
Co-founders and key employees have re-invested c.35% of
after tax proceeds in Intertrust shares (c.$11m, phased 3 Clear governance and lines of responsibility
year lock-up)
Project Management Office reports weekly into Steering
Intertrust client-facing teams will benefit from greater back Committee (Stephanie Miller, Hans Turkesteen, Theo
office support from India Splinter, Shankar Iyer)
Co-founders join Intertrust Executive Committee to deliver a successful integration
Shankar Iyer Chitra Baskar
Chief Solutions Officer Global Head of Transformation & Operations
143 Attractive value creation
Attractive value creation
Acquisition at $330m Enterprise Value(a)
Acquisition multiple of 17.3x EV / FYE Mar-19A EBITDA excluding synergies – comparable to
relevant high growth Fund Admin valuation benchmarks
Acquisition
multiples
Acquisition multiple of 8.0x EV / FYE Mar-19A EBITDA including run-rate net cost synergies
of $22m
ROIC > WACC in CY Dec-21(b)
ROIC > WACC
Double-digit ROIC in CY Dec-22 (3rd full year of ownership)(b)
Mid single-digit EPS accretion expected in CY Dec-20 (1st full year of ownership)(b)
Accretion
Double-digit EPS accretion expected in CY Dec-21(b)
(a) Simultaneous signing and closing on 17-Jun-19; €294m at closing EURUSD FX rate of 1.12 as of 14-Jun-19
(b) Including phased cost synergies, excluding one-off costs
154 Sound financing structure
Sound financing structure
Aligned to Intertrust’s capital allocation strategy focused on investing for growth
Uses & Sources ($m) Leverage ratio evolution
Uses Sources Adequate
covenant and
liquidity buffers
Enterprise value 330 Equity reinvestment 11
c.4.1x
o/w equity 303 New 3 year TLA(a) 150
(b)
Leverage ratio
o/w debt & debt-like 27 RCF drawdown 994 Sound financing structure
Capital allocation strategy focused on investing for growth
Clear prioritisation framework
Operational excellence
Opex
Invest in
1 organic growth
Cross-selling / up-selling
Capex
Technology innovation
Acquisitions, joint ventures and partnerships
2
If leverage ratio > 3.0x(a) prioritise de-leveraging
3 Dividends of at least 40% of adjusted net income
Return surplus capital to shareholders through share
4 buybacks to operate at leverage ratio of ~3.0x(a)
(a) Based on Senior Facilities Agreement definition which includes cost synergies
175 Increased medium term guidance
Increased medium term guidance
Improved growth and margin profile
Previous Upgraded
Underlying(a) revenue
› 3 – 5% › 4 – 6%
growth (Y-o-Y)
CY Dec-19 › At least 36% › At least 36%
Adjusted
EBITA
margin
CY Dec-21 › More than 38% › At least 40%
› Around 2% in medium term
Capex as
› Around 2% of revenue › Up to 3% in early years to deliver
% of revenue
Centres of Excellence
Effective tax rate(b) › Around 19% › Around 21%
(a) Underlying: Current and prior period at constant currency and, if applicable, including pro forma figures for acquisitions, based on closing EURUSD FX rate of 1.12 as of 14-Jun-19
(b) Based on current tax laws
Note: Based on closing EURUSD FX rate of 1.12 as of 14-Jun-19
18Illustrative combined financial metrics
Highly accretive to growth, margins and EPS
Intertrust Viteos Synergies Illustrative Combination
(in €m) (Dec-18 YE) (Mar-19 YE)
543(c)
Revenue 496 47 n/a
(4-6% annual growth)(d)
EBITDA 197 17
20(a) 234
% margin 40% 37%
EBITA 186 16 220
19(b)
% margin 37% 33% At least 40%(c)
Tax rate 19% 30% 21%
EPS Mid single-digit accretion
CY Dec-20
Double digit accretion
CY Dec-21
(a) EBITDA run-rate net cost synergies of $22m
(b) EBITA run-rate net cost synergies include c.€(1)m of depreciation on capex cost to achieve synergies
(c) Revenue does not reflect the 4-6% underlying revenue growth year-on-year as the synergies phase in which would impact illustrative margin
(d) Guidance for medium-term underlying revenue growth year-on-year
Note: Viteos financials converted at closing EURUSD FX rate of 1.12 as of 14-Jun-19 19Acquisition of Viteos: accelerates our strategy, as set out in
the Capital Markets Day
“M&A back on agenda focusing on US, Fund Administration and Capital Markets"
Strategic ambitions for 2021 M&A focus areas
1
Clients & Top 10 US Fund Admin
Services Completes Fund Admin
capabilities
1 Increase scale
2
Innovation &
Technology
Blockchain, RPA, Workflow
automation, Digitalisation/OCR 2 Complementary services
3
People
Strong alignment to drive
integration 3 Expand footprint
Offshore Centres of Excellence
Operational Excellence
Standardisation | Centralisation | Shared Services
for standardisation,
centralisation and shared
services
4 Technology enablers
20Key take-aways
Game-changer for Intertrust accelerating higher growth
Accelerates our strategy to become a global leader in tech-enabled Corporate & Fund Solutions
Gain material presence in US, increase Funds, and accelerate our growth potential
Leverage Viteos' digitalisation and automation technology for incremental revenue growth and efficiencies
Build on Viteos' offshore Centres of Excellence to deliver $22m net run-rate cost synergies
Enhanced client solutions
Strong alignment to drive integration
Attractive value creation
Sound financing structure
Increased medium term growth and margin guidance
21Disclaimer
Forward looking statement disclaimer for presentation:
This presentation contains forward-looking statements. These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements.
Many of these risks and uncertainties relate to factors that are beyond Intertrust’s ability to control or estimate precisely,
such as future market and economic conditions, the behaviour of other market participants, the ability to successfully
integrate the business of Viteos and achieve anticipated synergies, interest-rate and exchange-rate fluctuations, changes in
tax rates and changes in laws and regulations. You are cautioned not to place undue reliance on these forward-looking
statements, which speak only of the date of this presentation. Intertrust does not undertake any obligation to update these
forward-looking statements.
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