Broadridge To Benefit From FundsLibrary Buyout: Here's How

Broadridge Financial Solutions, Inc. (NYSE:BR) yesterday announced that it has completed the acquisition of FundsLibrary — a leader in fund document and data dissemination in the European market — from Hargreaves Lansdown (LON:HRGV). The deal was initially announced on Jan 21, 2020. Financial terms have been kept under wraps.

Over the past year, shares of Broadridge have gained 6.6% against 1.2% decline of the industry it belongs and 4.9% rally of the Zacks S&P 500 composite.

Ramp Up of European Regulatory Communications Business

FundsLibrary will be merged with FundAssist, Broadridge's existing European funds regulatory communications business.

The union of FundsLibrary's data platform and technology with Broadridge's existing fund calculation, document creation and translation capabilities should help fund managers increase distribution opportunities and comply with both UK domestic and EU regulations such as Solvency II and MiFID II.

The combined entity will be known as Broadridge Fund Communication Solutions, and will be led by Arun Sarwal, former CEO of FundsLibrary.

Collectively, the buyout will amplify Broadridge's pan-European regulatory communications and digital data platform, supporting the lifecycle of fund data, documents, and regulatory reporting for the investment industry.

Considering the increasing demand for regulatory requirements across multiple jurisdictions, the deal seems to be a strategic move on Broadridge's part to strengthen its foothold in the global investment industry.

We also believe the move will help Broadridge strengthen its Investor Communication Solutions segment, which offers governance and communications solutions to banks/broker-dealers, asset management firms/mutual funds, corporate issuers and wealth management firms. Revenues from the segment decreased 2% year over year in second-quarter fiscal 2020.

Zacks Rank & Stocks to Consider

Currently, Broadridge carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader Zacks Business Services sector are Interpublic (NYSE:IPG) , Omnicom (NYSE:OMC) and Genpact (NYSE:G) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term expected EPS (three to five years) growth rate for Interpublic, Omnicom and Genpact is 4.5%, 5.6% and 11.9%, respectively.

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