FD Technologies to Sell First Derivative Business for £230 Million

Monday, 07/10/2024 | 06:18 GMT by Damian Chmiel

The deal, expected to close in Q4 2024, aims to streamline operations and return cash to shareholders.

FD wants to focus on its KX analytics division.

FD Technologies announced today (Monday) that it has agreed to sell its First Derivative Business to EPAM Systems, Inc. for £230 million ($290 million). This marks a significant restructuring for the Northern Irish technology firm.

FD Technologies Sheds First Derivative in $290M Deal

The divestment, expected to close in Q4 2024 pending shareholder approval, comes as the culmination of a strategic review initiated by FD Technologies in March. The move aims to streamline the company's focus on its KX division, which specializes in real-time analytics and AI-driven solutions.

Seamus Keating, Group CEO at FD Technologies

“This divestment is positive for all stakeholders,” said Seamus Keating, CEO of FD Technologies. “It enables the Group to focus on KX and provides the resources to deliver on our exciting growth plans while also enabling us to return excess cash to shareholders.”

The transaction is projected to generate net cash proceeds of approximately £205 million after adjustments and costs. FD Technologies plans to use the funds to repay about £20 million in net debt and return excess cash to shareholders. The details will be announced in November.

For the first half of fiscal year 2025 ended August 31, FD Technologies reported that both KX and the First Derivative Business performed in line with expectations. KX added £7.4 million in annual contract value, while the First Derivative Business saw revenues of approximately £79 million. The numbers were similar to the second half of the previous fiscal year.

Based on the financial results for fiscal year 2024 (FY24), the company reported a total revenue of £248.9 million. The KX division demonstrated strong performance. It had a 12% increase in revenue when measured in constant currencies, reaching £79 million. Notably, the recurring revenue component saw significant growth, rising by 19% compared to the previous year. As a result, recurring revenue now constitutes 86% of KX's total revenue, up from 81% in the prior fiscal period.

“Bringing together the First Derivative Business and EPAM 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,” stated Balazs Fejes, President of Global Business at EPAM.

The divestment is subject to shareholder approval at an upcoming general meeting expected to take place in October. FD Technologies will provide further details on its strategic progress and trading performance in its interim results, scheduled for release in November.