US firm to acquire consulting arm of Northern Ireland technology company for £230million

FD Technologies, a technology firm based in Newry, has entered into an agreement to sell its First Derivative business to EPAM Systems,for an enterprise value of £230million.

Founded in 1993, Pennsylvania-headquartered EPAM is a digital transformation services and product engineering company.

The deal will provide the "optimal organisational structure" and allocation of capital to drive value for shareholders, as determined by the group’s structure review, announced in March 2024.

FD also said the move will enable the company to focus on KX, the part of the group with the largest value creation potential, and provide the funding for KX to become cash generative, with the resources to execute on the growth plan in its target markets.

For the first half of the group’s financial year to 31 August 2024, KX delivered annual contract value added of £7.4m, within the guidance of £6m-£8m for the period.

The First Derivative business’ capital markets consulting customers continued to be cautious in their spending, with revenue for the period of approximately £79m, similar to the second half of FY24.

Seamus Keating, chief executive of FD Technologies, said: "This divestment is positive for all stakeholders, benefitting our shareholders and the customers and employees of KX and the First Derivative Business.

"For shareholders it enables the group to focus on KX, and provides the resources to deliver on our exciting growth plans while also enabling us to return excess cash.

"KX and its customers will benefit from a strengthened and broader partnership with EPAM that opens up opportunities in capital markets and beyond, while the First Derivative Business customers will benefit from EPAM’s scale and reach combined with the deep domain skills in capital markets within the First Derivative business."

Balazs Fejes, president of global business and chief revenue officer at EPAM, said: "Bringing together the First Derivative Business and EPAM marks the beginning of a distinctive enterprise that will not only enhance value for our clients but also foster substantial growth opportunities for our teams.

"Leveraging their strong business and technology services heritage, especially in capital markets, allows us to expand our financial services solutions portfolio to our clients, who need to evolve and scale their digital ecosystems, gain greater data insights and enhance operations while minimising risks and maintaining regulatory compliance."

The divestment is expected to complete in the fourth quarter of 2024, subject to shareholder approval.