KRM22 buys Dutch risk management tech firm Object+

Risk management technology and software company KRM22 has entered into an agreement to acquire Object+ Holding, it announced on Thursday, with completion of the acquisition expected to take place within three business days of the date of signing the agreement.

The AIM-traded firm described Object+ as a risk management and post-trade services technology business, focussed on capital markets.

It was headquartered in the Netherlands, with offices in Amsterdam and Chicago.

The board said the acquisition was in line with its investing policy and strategy, and complemented the capital markets technology already available on its ‘Global Risk Platform’.

Its chief executive officer, Martin van Aalderen, had more than 20 years of industry experience and joined Object+ in 1999.

He would remain with the KRM22 Group as managing director of market risk.

Looking at the benefits of the acquisition, KRM22 noted that it already offered post-trade market risk solutions through previous acquisitions and partnerships.

The acquisition of Object+'s technology products would expand its market risk solutions to pre-trade and at-trade, with direct connectivity to major global exchanges.

In particular, the board said the acquisition would bring the ability to share data between systems and for customers to remove the need for reconciliations, thereby reducing the cost and complexity of their risk management.

It would also provide a team of subject matter experts in real-time trade processing, a complementary customer base, and additional cross-selling opportunities for KRM22.

Object+ was currently generating $1.1m (£0.9m) of annualised revenue, with around 50% of that coming from recurring contracts with eight institutional customers.

The business made a small loss of approximately £50k in the 2018 financial year.

KRM22 said the initial consideration for the acquisition was $1.15m, with $0.5m payable in cash and $0.65m through the issue of 606,909 new ordinary shares at a price of 85p.

The deferred consideration would be a maximum of $2.75m, payable in three tranches subject to earn-out conditions based on the growth of annual recurring revenue of Object+'s products and services.

KRM22 said the deferred consideration could be satisfied in either cash or shares at its discretion, with the number of consideration shares to be determined based on the value weighted average closing price for the 60 consecutive trading days prior to the day of each issue of shares.

Together, the initial and growth-based deferred consideration was limited at a maximum of $3.9m.

“This acquisition will be a further strategic step towards the development of our Global Risk Platform, bringing strong post-trade execution and market gateway expertise which is complementary to our existing market risk offering,” said KRM22 chairman and chief executive officer Keith Todd.

“Our focus is to provide applications which help our customers reduce the cost and complexity of risk management at their firms and believe that this acquisition will help us to build even greater momentum in the market.”

Martin van Aalderen, CEO at Object+, added that the idea of bringing a unified global risk management platform to capital market companies was one that the industry had been “waiting for”.

“The success that KRM22 has had in bringing this to market in just one year of operations is incredibly impressive.

“Our employees, shareholders and clients are excited to be part of that initiative as we bring our pre-trade and post-trade risk products and services to KRM22's Global Risk Platform.”