It looks like we were right, UK banking and financials software supplier Misys does plan to rejoin the ranks of the London stock market, but even we are surprised by quite how full the implied valuation stands.

We firmly flagged the likelihood of a return for Misys in August (read here), although it's fair to say that speculation and rumour had been doing the rounds among software industry watchers for months. But the then 'mooted $5 bn (£3.75bn) price tag,' to quote from that article is way down on the numbers being thrown around now.

Misys office

'There is no comment on valuation, as we would expect, but market rumours suggest that an enterprise value of around £6bn to £6.5bn and a market cap of £5bn to £5.5bn is on the cards,' according to back of notebook calculations by Ian Spence, founder and chief analyst at IT analysis consultancy boutique Megabuyte.

This implies a whopping EV/EBITDA multiple of around 22-times, or a current year of just under 20.

That would slap it straight into the blue-chip FTSE 100 index at the first review post IPO, joining Sage (SGE) and Micro Focus (MCRO), which we briefly looked at on 5 October.

This is based on sturdy figures in the three years under Vista ownership, the private equity people, since the business was taken private in a rough $1.3 billion deal back in 2012.

Financials software

Revenues have grown from €696m to €811m, a CAGR of 8%, but profits have grown more rapidly, up from €261m to €336m as EBITDA margins have risen four percentage points to 41.5%. In the first quarter of this year, to 31 August 2016, revenues were flat at €168m but EBITDA was up 15% to €62.5m as margins rose five percentage points.

'This really is great news if you care about where tech companies are listed,' says Richard Holway, a long-run tech industry expert and founder of the TechMarketView website.

'I do,' he states, and here's why. 'It really matters as advisers, investors, analysts, journalists, start-ups, scale-ups etc tend to gather in hubs. The more listed tech companies there are in London (and UK!) the more will come.'


Issue Date: 07 Oct 2016