Jade buys software firm

Jade Software Corporation is on the purchase trail after buying a low-profile, but highly successful homegrown software company servicing the global financial sector.

Jade is not disclosing the price paid for Methodware, based in Wellington, but managing director Rod Carr said Methodware's turnover was about $8 million, 20 per cent the size of Jade.

Methodware has 31 staff. About half work from Cuba Street headquarters in Wellington and the rest were "scattered around the world", Carr said.

Methodware sells operational risk management software to the world's financial services sector and counts big names amongst its customers.

Carr said it had services centres in London and Toronto for the European and North American markets.

"It has had a lower profile in Australia but we can do something about that," Carr said. It had been growing quite rapidly in the past three years.

The company started in 1993 as a joint venture by Ernst and Young and its chief technologist, Paul Waddington, Carr said. About seven years ago Waddington lead a management buy-out. Before the purchase by Jade, the private company was 60 per cent-owned by Waddington and almost 10 per cent each by a trust associated with Chris Moxon, the chief executive, and by Angela Boustridge, Companies Office documents show.

Methodware will continue to trade under its own brand and chief executive Moxon and chief technology officer Waddington would remain in their current roles and as directors of the company.

Carr said Methodware started to get traction in the late 1990s with the Basel II accord, which allowed banks to get relief from the amount of capital they held. Then financial sector failures in the United States lead to the Sarbanes-Oxley legislation, which required companies to have systems in place to comply with the legislation.

Methodware capitalised on these, providing software which enabled companies to keep track of their compliance.

Carr said Methodware was the first company Jade had bought after considering 18 in the last 15 months. It was also considering other potential purchases but the process took time. The first criteria of "strategic fit" weeded out 90 per cent of the companies for sale, Carr said.

The company then had to be of a suitable size with some scale but not so big that it could not be managed by Jade. Thirdly, Jade and the acquisition combined had to be worth more than the two separate.

Carr said even when a company for sale passed those criteria, the potential purchase could fall at the fourth hurdle, the two parties agreeing on a sale price. A number of potential purchases had failed over disagreement on price.

Methodware's strength in the financial services sector – with customers such as banks, building societies, and insurance companies – would complement Jade's bespoke software financial development.

Methodware's clients included Lloyd's of London, Skipton Building Society, Investec, Friends Provident, McCain Foods, LVMH, Halliburton, Adobe and Yahoo. In New Zealand they included the Inland Revenue Department, Ministry of Health, Defence Force and Airways Corporation.

Carr said Jade was seeking growth through acquisitions and partnerships, plus organically.

Jade is rebuilding after hitting a rough patch in 2003 when it laid off 25 per cent of staff. It recapitalised in 2004.

E-MAIL THIS

PRINT THIS

MOST POPULAR