Under the terms of the deal, Rosemont, Illinois-based Kanbay will pay $5m to acquire New York-based Accurum, with an additional $2m to be paid depending on the company achieving certain performance targets. Accurum specializes in providing software and services to the US and UK capital markets, and counts Merrill Lynch among its customers.
Formerly known as Pinnacle Systems, Accurum changed its name in June 2004 at the same time as it announced plans to expand its software development center in India. The company today employs 180 people in the UK, the US, and India. It provides its services to capital markets firms within the front and middle office, including sales and trading, risk management, and research. Last year, Accurum announced plans to expand its development center in Chennai, as well as to open new centers in Mumbai and Bangalore, to grow headcount to 1,500 over the next five years, and grow revenue to $100m by 2009.
The business model of Accurum is similar to that of Kanbay, which also utilizes an offshore development model for providing low-cost software services to its US clients. Kanbay employs 4,000 people, and provides IT consulting, software development, and systems integration services for clients including HSBC, Household International, Morgan Stanley, CitiFinancial, Development Bank of Singapore, ABN Amro, and Sun Life Financial.
Kanbay became a public company in July 2004 when it listed on Nasdaq through an IPO that raised $93m. For 2005, the company said it expects revenue to increase by at least 25% to over $228m for the full year, with the first quarter bringing in $52m. Net income is expected to grow in line with revenue to $34m for the full year.
Following the closure of the deal, Venkat Vallabhaneni, Accurum’s CEO, will continue in his position.
