International Business Machines Corp. and U.S. Trust Corp. announced last week that they have sold their equity interest in a trust software firm to the company's management and a Belgian investment fund.
The software firm, Financial Technologies International, hired investment banks Hambrecht & Quist Inc. and Alex. Brown & Sons to arrange the buyout. Terms of the private placement were not disclosed.
"We want to expand our markets beyond IBM," said Charles J. Lewis, president and chief operating officer at Financial Technologies.
The New York-based technology company provides software called AMS/Open, which is used by banks for trust, brokerage, global custody, mutual funds, and capital markets services.
Mr. Lewis said that AMS/Open is designed to run on a number of types of hardware, including that of IBM, Hewlett-Packard Corp., and Digital Equipment Corp.
"As companies become more self-sufficient, its not uncommon for management to prefer independence from association with any one particular hardware vendor," he said.
For IBM, the deal is similar the one last year when the computer giant sold back its equity interest to Dallas-based Hogan Systems Inc.
Cecil O. Smith, chief information officer with Wachovia Corp., Winston-Salem, N.C., said Financial Technologies, like Hogan, can now "control its destiny."
"Our view on this is that IBM invested heavily into this company a few years back just as they invested heavily into Hogan systems," Mr. Smith said.
"IBM helped to seed them and get them started and now they are successful in their own right. It's a way of moving them towards more independency away from the IBM umbrella."
Wachovia first signed with Financial Technologies in a partnership agreement in 1990 and has since installed the company's entire suite of trust services software.
Financial Technologies' management started the buyout process early in 1994, Mr. Lewis said. Hambrecht & Quist found the Invus Group, a New York-based firm that manages a $400 million venture capital fund aimed at growth industries in the U.S., for the Belgian investment group Artal S.A. Invus evaluated the company and advised Artal on the deal.
Other Financial Technologies customers are ABN AMRO, First Bank Systems, Northern Trust, Norwest Bank, SunTrust Banks, Toronto Dominion, Wells Fargo, and Wilmington Trust.