The recent purchase of Origo by private equity firm Vespa Capital is raising questions in the industry.
A source stressed to Money Marketing that the announcement has been done in a “very low-key way”.
Vespa Capital announced the “partnership” with the leadership team at Origo today (20 May) in the late afternoon.
“It’s not the normal sort of announcements as when private equity buys into this,” the source said.
The source also questioned why a private equity firm is interested in acquiring a business that has been a non-profit since its creation.
They said: “The business has been run by the insurers sharing the cost, and then there were some revenues from services. What will a private equity firm be asking?
“Obviously, they see potential in the business, but where are the areas that they are looking to grow in the business? What will that mean in terms of costs for existing customers?
“For example, Origo provides a lot of services for free to advisers. Are advisers now going to have to pay for those services?”
The source also highlighted that this transaction goes against Origo’s communication.
They said: “It‘s an interesting move. Origo is an organization that has always argued that it was good for essential infrastructures to be owned by the industry.
“Now you’ve got the complete reverse. We are going from infrastructures being owned by the industry to infrastructures being owned by a private equity firm.
“Private equity firms have one purpose: to create a lot of value within a short period of time. What does that mean for all the different stakeholders?
“What are the things about Origo that makes it attractive to a private equity firm?”
Vespa Capital stated in an announcement that it aims to establish Origo as a fully independent company.
It argued the transaction will provide Origo with the governance structure and support to invest in developing existing offerings and deliver new solutions.
Origo chief executive officer Anthony Rafferty said: “This is an exciting move for Origo, which will now be a fully independent business.
“Our focus will remain on delivering effective technologies across the financial services marketplace for the benefit of everyone – boosting efficiencies, improving performance, delivering faster asset transfers, reducing integration costs, helping to keep the industry secure, and importantly, improving the industry’s service to UK consumers.
“With the backing of Vespa Capital, we can take Origo to the next stage in our journey as the industry’s critical infrastructure fintech, continuing to invest in our existing product range and building new technology to help take the market forward and deliver even better outcomes for consumers.
“We will continue to work collaboratively with the industry to deliver the technology and services that it needs to operate now and into the future.
“We believe Vespa Capital will be an ideal investment partner due to their track record of developing technology businesses, supporting growth and working collaboratively with management teams.”
The transaction was concluded on 20 May 2022 for an undisclosed sum.
Vespa Capital was advised on this transaction by DLA Piper, BDO, Fairgrove, Confidas, Blick Rothenberg, Intechnica & CISO Select.
Origo’s shareholders were advised by Craven Street Capital and MBM Commercial.
Vespa Capital is supporting the incumbent management team at Origo.
Origo is an infrastructure fintech provider to the pensions and lifetime savings industry.
It was established in 1989 as a non-profit organisation owned by 12 pensions providers and investment management firms.
Their mandate was to develop technology solutions to solve inefficiencies and process pain points across the industry.