UBS has sold its UBS Delta risk and performance analytics service to StatPro Group, a listed provider of cloud-based portfolio analysis and asset pricing services for the global asset management industry listed on the Alternative Investment Market (AIM) - a sub-market of the London Stock Exchange (LSE).
UBS Delta's portfolio analysis and risk management system will enable StatPro to extend its risk and performance analytics service from the middle office to the front office of asset managers. The acquisition which comes on the back of a number of conversations StatPro has had with UBS over the last nine months, is phased over three to five years as StatPro incorporates UBS Delta's functionality into its flagship product, StatPro Revolution, according to Neil Smyth, marketing and technology director at StatPro.
"UBS Delta has been a very successful product for nearly 20 years and is an established risk and performance analytics platform," said Smyth, adding that UBS had been looking for the right partner to take Delta forward and invest in the product while supporting existing clients.
According to Smyth, UBS Delta fits very well with what StatPro does because it will combine StatPro Revolution's performance measurement, equity attribution and risk reporting with UBS Delta's front office risk and fixed income analysis.
"Combining the two creates a performance and risk solution that brings the front and middle offices closer together by using the same underlying data and a single analytics platform," said Smyth. "StatPro is committed to supporting the existing UBS Delta clients for the next five years. Our plan over the next three years is to build the Delta functionality within the scalable Revolution platform and release functionality to our client base as we go. Delta clients will be able to migrate to the Revolution platform over that time period."
UBS' move is the latest among investment banks reviewing their operations and offloading non-core functions and follows Delta Capita's acquisition earlier this year of parts of Credit Suisse's back- and middle-office functions such as the production of documentation, and the ongoing oversight of the product's suitability for end investors.
"This is happening across the market as regulations and a re-focus on core functions means software platforms such as Delta come under review," said Smyth. "[UBS Delta's] future is better served as part of a dedicated software vendor such as StatPro with our focus on both the product functionality and the underlying technology."
According to Smyth, the UBS Delta acquisition will enable StaPro to push its StaPro Revolution platform to the next level. "Detailed levels of analysis requires lots of underlying data and it's also very important to have high levels of coverage across clients' portfolios," said Smyth. "Clients are no longer interested in empty box-software but want solutions that come complete with the data required for detailed levels of analysis across all asset-classes."
Smyth also said that the firm's investment portfolio management software will continue to provide access to global equity exchanges for pricing, corporate actions and reference data including access to client specific securities from the derivative and structured product world, as well as quantitative analysis for derivatives and other highly structured products; bespoke pricing and risk system design and implementation.
"To be competitive in this market you have to be able to offer a comprehensive coverage from plain vanilla portfolios to complex securities," said Smyth. "Investors are seeking exposure to more complex products as they search for higher returns and the data requirements are also more sophisticated StatPro Revolution comes complete with comprehensive market data. We price any listed instrument as well as complex assets and derivatives."
StatPro launched its portfolio analytics business in 1994 and acquired Canadian data and portfolio management technology business FRI Corporation in 2006 to provide market data to build the Revolution platform, 'the industry's first cloud-based SaaS portfolio analytics platform'.
The firm also offers StatPro Composites - a purpose built system for global investment performance standards (GIPS) compliance; StatPro Fixed Income - a forensic analysis tool for bond portfolios; and StatPro Risk Management - a system to measure liquidity risk (which is now a requirement for Ucits IV and other regulations).
"StatPro is also very strong on liquidity risk showing data for normal, stressed and highly-stressed situations and working out valuations of portfolios during market disruptions," said Smyth. "A successful analytics platform has to be able to help clients manage this data to ensure quality results while making the process simpler and more cost efficient."
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