The inevitable has happened: IT2 Treasury Solutions (IT2), which is owned by private investor CapMan Technology, has been sold to Wall Street Systems for an undisclosed sum which Bobsguide "understands is likely to be in the region of £60-75m."

IT2 provides treasury management software and services for large corporations and small and mid-sized financial institutions. The company is headquartered in London and has offices in Copenhagen, Amsterdam, New York and Hong Kong. CapMan Funds invested in IT2 in July 2007. During the funds' holding period, IT2's revenue increased at CAGR of 17%. For CapMan investing in IT2 has been successful venture, but what about the prospects for the existing IT2 team and their users?

Prospects for IT2
The IT2 Press Release contains a terse quote from CEO Kevin Grant: "The company's prospects to continue its successful operations as part of a larger group remain excellent." This short quote reflects all the tensions and concerns that the IT2 team must be feeling. There will undoubtedly be merging and consolidation of sales offices and support teams, and marketing efforts. Wall Street Systems will need to achieve these savings to pay for their investment.

One of the main issues will be the great overlap between City Financials's eTC system, which Wall Street Systems bought in 2010, and the IT2 system. Both are very good systems and have considerable merit. It will be very difficult for Wall Street Systems and ION Trading (who own WSS) management to choose between them. Nevertheless, choose they will, even if it is just the level of marketing and support and the priorities for each of the systems and their development. They cannot be the same for long. Difficult times lie ahead.

IT2 user prospects
IT2 users must be concerned about:

• product development: what will happen to the current development plans
• customer service support and how it will change
• the long-term commitment to the IT2 product and whether in the longer term they will have to move to eTC or other Wall Street Systems services
• and many other issues.

The active IT2 users group is going to be vital in reviewing these issues with the new owners and protecting their members's interests. And consultancy groups are already offering support in managing these issues.

Treasury Management Systems market
The general TMS market just got a whole lot smaller. There are now only two major players - SunGard and Wall Street Systems, then Reval and a dwindling list of smaller players including Bellin, Kyriba and Salmon.

This takeover of IT2 may be a boost to the smaller players who will place even more emphasis on the personal support and attention that smaller organisations can provide.

 

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Whatever happens, Kevin and Paul and the rest of the IT2 team are to be congratulated on delivering a beautiful KPI driven system that has improved the efficiency and performance of the corporate treasury departments world-wide. I know IT2 has not disappeared, but the distinct individual flavour of these systems seems to disappear when they are absorbed by the larger players.