Fintech Fund Buys a Business from ACA Compliance Group

ACA Compliance Group, a company that by all accounts is thriving amid demand for governance, risk and compliance (GRC) advice, technology and services, has sold its NorthPoint technology product and consulting business to Credit Suisse Asset Management's NEXT Investors, a fintech growth equity fund.

New York-based ACA, founded in 2002, has bulked up through acquisitions, notably with its 2018 deal for Cordium. In 2014 it bought NorthPoint Financial, a provider of software and services to investment management firms. As recently as last September, a press release reported “continued growth and increased adoption of its NorthPoint Data Management Solutions for investment managers in the first half of 2019” and noted recent Data Warehouse enhancements addressing “the unique data management challenges of investment managers.”

NEXT Investors, which Credit Suisse Asset Management launched in 2000 and began investing in financial technology several years in advance of the so-called fintech boom, said that NorthPoint will be wholly owned by a newly created business intelligence company, Portfolio BI. ACA, which retains technology offerings including RegTech solutions, ComplianceAlpha and Regulatory Reporting software, “will partner with Portfolio BI to service mutual clients,” according to a February 20 announcement.

A day earlier, ACA announced the availability of a payment and fraud risk assessment (PFRA) offering. It is overseen by Kamlesh Harry, a former JPMorgan Chase & Co. executive director in technology, cybersecurity and payment fraud functions, who is senior principal consultant of ACA Aponix, a 2015 acquisition.

ACA recently appointed as its CEO Shvetank Shah, formerly of research and advisory firms Gartner and CEB.

Operational Involvement

The NEXT-NorthPoint transaction continues a trend of GRC- and regtech-sector dealmaking - including the 2019 sales of Nasdaq's BWise unit to SAI Global, and of enterprise risk management vendor Lockpath to NAVEX Global. NorthPoint's buy-side-focused portfolio and data management capabilities have some overlap with those of Axioma, which Deutsche BÖrse Group acquired last year, with a significant assist from global growth equity investor General Atlantic, and which was combined with the STOXX and DAX index businesses in Qontigo.

Now a growth equity buyer is playing a strong operational hand in Portfolio BI. The new entity holding NorthPoint is led by Jeremy Siegel, who is also CEO of LUX Fund Technology and Solutions, a business and technology solutions provider for the alternative asset industry and a recipient of Series A funding from Credit Suisse's NEXT Investors in December 2017. A 24-year financial services industry veteran, Siegel was managing director in Credit Suisse's Global Markets division and global head of the Prime Consulting team before becoming CEO of LUX FTS in 2018.

The LUX Transcend product was described at the time of a 2019 rebranding as “a firm's portfolio intelligence dashboard, dynamic data warehouse, integration platform and reporting solution.”

NorthPoint offers an Investment Management suite that includes an Order Management System, Portfolio Management, Data Warehouse, Security Master, and Price Master, along with professional services. NorthPoint says that it has provided solutions to more than 150 investment managers.

Continuing Relationship

“The NorthPoint product suite fits well within the vision and technology offered by Portfolio BI,” said Raj Bakhru, ACA chief innovation officer, who was a co-founder of the Aponix business and a founding-team member of Kepos Capital.

“As we continue to focus on ComplianceAlpha, our regulatory technology platform, we look forward to continuing a close relationship with Portfolio BI and plan to provide exemplary service to our mutual clients,” Bakhru added.

Alan Freudenstein, co-head and portfolio manager of Credit Suisse Asset Management's NEXT Investors, said, “We are pleased to welcome the NorthPoint team and Portfolio BI to NEXT Investors' portfolio of companies. NorthPoint's comprehensive product suite - spanning order management software to portfolio management - provides a differentiated offering to a growing client base that includes hedge funds, allocators and asset managers. We're excited about the opportunity for growth in this vertical, as financial institutions continue to embrace new technology and tools to solve their operational and client needs.”