BearingPoint spins-off RegTech arm with investor to drive growth

04 November 2020 Consultancy.eu

BearingPoint has sold a majority stake in its Regulatory Technology (RegTech) business to Nordic Capital, with the aim of taking the unit to the next level. 

The global consulting firm has been active in the RegTech space since the turn of the century, when it launched its Regulatory-as-a-Service (RaaS) managed service. Since then, BearingPoint has added a suite of solutions and services to its RegTech portfolio, including offerings for risk, tax, valuation and reporting solutions for financial services (Abacus Solution Suite, ABS+, EasyTax, FiTAX, FiRE) and solutions for central banks and supervisory authorities (Abacus360 Regulator). 

For Nordic Capital, a private equity firm with a track record of developing technology and software companies, BearingPoint’s RegTech portfolio combined with a bright market outlook led the investor to step into the journey, explained Fredrik Näslund, a Partner at Nordic Capital.

Innovative Regulatory, Risk, and Tax Reporting Solutions and Services

“BearingPoint's unique portfolio of RegTech software and solutions is highly acclaimed in the industry and has already earned the trust of more than 6,000 reporting firms including banks, insurance companies, supervisory authorities and financial services providers. We are very impressed by the company’s market position,” he said. 

“We see strong potential for further expansion,” Näslund added, “and Nordic Capital is an ideal partner to play a formative role in the next phase of the RegTech business.” 

Facing an increasingly complex and demanding regulatory environment, banks, insurance companies and other financial services institutions are turning to technology to automate and streamline their processes. Meanwhile, many are outsourcing their processes to leverage specialisation and agility – a segment BearingPoint RegTech is also active in through its managed services offering.

According to one estimate, the market size of RegTech solutions and managed services is expected to grow from today’s $6.3 billion to $16.0 billion by 2025, at a staggering compound annual growth rate (CAGR) of 20%. For Patrick Palmgren, Global Head of BearingPoint's Capital division (which oversaw the RegTech unit to date), this provided the ideal backdrop for the spin-off. 

“The RegTech business unit will benefit from the increasing regulatory requirements around the world. As an independent firm, supported by a strong owner as Nordic Capital, it will have the necessary agility and flexibility to make the best possible use of these opportunities.” This will include investing in the advancement of existing solutions, expansion into new segments along the regulatory value chain, and further international growth.

Jürgen Lux, the CEO of the RegTech division, said: “We have used the past two years to enhance the autonomy of the RegTech business within the BearingPoint Group. Together with Nordic Capital, we have formed an ambitious growth agenda and will continue to invest in our proven, reliable and forward-looking software solution suite.”

As part of the terms and conditions of the transaction, BearingPoint will retain a minority stake in the company and remain a strategic consulting partner for the business.