Thesis
Yesterday, January 03, 2019, Sword Group (BS:SWPp), an enterprise risk management giant acquired Magique Galileo, a risk management startup, in Maidenhead, England. The strategic acquisition is believed to enable the former to extend its solutions offering, enter new markets, and enrich earnings performance.
Summary
- Sword Group is set to expand its enterprise risk management solutions offering by acquiring Magique Galileo, a risk management startup, based in Maidenhead, England.
- Also, Sword Group, a Luxembourg based corporation with more than 2,000 employees expects to penetrate into emerging markets with the help of the strategic acquisition.
- Moreover, the Sword Active Risk holding company projects its revenues to soar to €200 million towards the end of its 2019 fiscal year.
Extend Solutions Offering
One of the core elements attributed to the acquisition is to merge Magique Galileo and Sword Active Risk, a risk and compliance subsidiary based in Maidenhead where it provides enterprise risk management software services. As a result, Sword Group, the firm, headquartered in Luxembourg City, Luxembourg will be able to create a new entity that will be called Sword GRC, which will allow the business intelligence leviathan not only to generate added value but also to extend its solutions offering in its targeted market.
Enter New Markets
"This acquisition is about enabling us to extend our GRC solution offering, move into new markets, provide greater value to our customers, and to create more opportunities for our employees,” said Nick Scully, Chief Executive Officer of Sword GRC who was the former Chief Operating Officer of Sword Active Risk.
Another key factor that led Sword Group to the deal is the ability to penetrate into emerging markets. For example, while Sword Active Risk currently focuses on infrastructure, energy, and defense markets, Magique Galileo targeted audience includes the financial services market and more specifically the banking and insurance sector -- the new market opportunities in which the establishment with more than €275 million market valuation has vowed to penetrate.
Enrich Earnings Performance
On January 01, 2019, Sword Group consolidated its holding to 49 percent in Tipik, a Brussels based communication agency that recently generated revenue of €10 million with an EBITDA margin of 8 percent. Adding such consolidation and the Magique Galileo acquisition, the organization, led by Jacques Mottard has forecasted its 2019 revenue to reach €200 million compared to €173 million and €192 million (estimated) in 2017 and 2018, respectively.
Sword Group reported an EBITDA of €21.60 million in its 2015 fiscal year. This figure slightly increased by 15.28 percent, an approximate of €24.90 million and 11.65 percent, which equals €27.80 million in 2016 and 2017, respectively, representing a CAGR of 8.78 percent within the period of three years.
It was also reported that towards the end of 2018, the enterprise quality management behemoth recorded a dinky EBITDA of €28.50 million, an amount with only 2.52 percent increment from its previous year. It is projected to see a -19.30 percent decline, which is approximately €23.00 million, however, with a sharp recovery of 10.43 percent or € 25.40 million in 2019 and 2020, respectively, sitting on a CAGR of -3.77 percent over the course of three years.