The wealth management fintech that soared in 2018
One Australia-based advice fintech firm performed well beyond expectations, with its share price more than doubling through 2018.
Bravura Solutions provides software for the wealth management, life insurance and funds administration industries. It’s flagship product, Sonata, is a platform that supports the digital delivery of investments and wraps, superannuation, life insurance and private wealth.
Last year the group signed up New Zealand-based ASB Bank and Commonwealth Super, adding to a formidable list of clients that also includes AMP, CBA, Perpetual, Statewide Super, Fidelity International, Prudential, Scottish Friendly, Mercer, Westpac NZ, TAL, Partners Life, Suncorp, Bank of New York Mellon, Schroders, Lloyds and Citi.
Bravura has a market cap just under $900 million after its share price soared more than 140 per cent over the last year, from $1.77 in January 2018 to $4.26 today.
In FY18, the company achieved revenue of $221.5 million, an increase of 15 per cent over the previous year. Group EBITDA increased by 18 per cent to $38.6 million, compared with $32.6 million in the prior corresponding period. Group NPAT increased by 27 per cent to $27 million, up from $21.4 million in FY17. As at 30 June 2018 the company had net cash of $24.8 million.
Ironbridge Capital was an early investor in the business and helped underwrite much of the research and development involved in bringing the Sonata platform to market. The private equity player sold its 47 per cent stake in the last financial year.
There is no doubt that the wealth management and funds administration industries are undergoing significant change. Compliance and regulation are on the rise globally. In Australia, the industry is eagerly awaiting the outcome of the financial services royal commission, which will hand down its final report next month.
For a tech provider like Bravura, these challenges present significant opportunities.
“The need for a modern technology platform capable of providing end-to-end digital delivery and administration in the wealth management industry is becoming increasingly important,” Bravura chief executive Tony Klim said.
“Regulatory change in financial services continues to evolve. The end consumer’s demand for an intuitive digital experience with their wealth management services is growing. Operational efficiencies are still pursued by businesses to offset constant margin pressure.
“In this context, we are confident that a multiyear pipeline of opportunities lies ahead to drive further growth.”
The company has already expanded beyond Australia into markets such as New Zealand, South Africa and the UK.
Speaking at the group’s AGM in November, Mr Klim expanded on the potential he sees for the fintech to continue profiting from the challenging landscape in which its clients now operate.
“Bravura’s clients operate in the wealth management, life insurance and funds administration segments of the financial services industry. Our clients in these segments face a remarkable set of challenges,” he said.
“There are a number of adjacent geographic markets that are currently demonstrating or likely to demonstrate in the near term, market characteristics similar to the ones in which Bravura currently operates and thrives. These include an increasingly sophisticated financial services economy, more complex financial products and increasingly more complex financial services regulation.
“Bravura is actively exploring these markets for their potential as a growth opportunity for the business. Acquisitions and greenfield expansion are both under consideration.”
However, while the company has achieved significant success in recent years, like many tech firms it also faces significant security risks. The company's full-year report for FY18 noted that information security breach and a failure of critical systems are one of four material risks for Bravura.
“Bravura Solutions could be impacted by the failure of critical systems, whether caused by error or malicious attack,” the group said.
The company has taken a number of measures to mitigate this risk, including mandatory security awareness training across the business, dedicated information security teams and an ISO 22301:2012 accreditation for its disaster recovery and business continuity management systems.
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