Fiserv is selling 60% of its investment services business, which builds technology for the wealth and asset management industry, to private-equity firm Motive Partners for $510 million.
Founded in 1979 as Security APL, the investment services division now provides technology to seven of the top 10 U.S. broker-dealers and nine of the top 12 retail asset managers, according to a Fiserv statement.
The investment services unit helped
develop LPL Financial's ClientWorks platform, and its turnkey asset management platform, Unified Wealth Platform, services 5 million accounts and $1.4 trillion in assets. The business also developed
a digital advice platform, Marstone, that counts Interactive Brokers, HSBC Bank USA and BNY Mellon Pershing among its customers.
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"The Investment Services business has demonstrated its ability to deliver a compelling solution for its wealth and asset management clients and I am confident that our team at Motive Partners will add significant value through innovation, insights and an expanded network," Rob Heyvaert, founder and managing partner of Motive Partners, said in a statement.
Fiserv will retain its 40% interest in the business. The newly formed joint venture will be led by the investment services unit's current president, Cheryl Nash. Mr. Hayvaert will serve as executive chairman.
"To position ourselves best, it is essential to continue to innovate, and Motive Partners' expertise and focus on value creation will help enable an exciting next chapter for our business and our clients," Ms. Nash said in a statement.
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The deal is expected to close in the first quarter of 2020. Fiserv was unable to provide additional comment.
Despite the success of the investment services team, some criticized Fiserv, a large company that focuses primarily on payments (such as its Clover point-of-sale platform) and banking, for not investing enough in the technology.
"Investment services has done an incredible job in updating their technologies with little investment by Fiserv," said LifeYield chief marketing officer Jack Sharry.
April Rudin, founder and CEO of marketing firm The Rudin Group, also remarked on Ms. Nash's success with investment services and the reputation she's built in the wealth industry. With Motive's investment, Ms. Nash will have the resources she needs to continue growing, Ms. Rudin said.
"Fiserv investment services was not a 'core' part of Fiserv's core banking/data offering," she added. "This announcement makes sense for all parties involved."
Rumors that Fiserv was looking to sell investment services have been circulating since the summer. Wealth Consulting Partners president Gavin Spitzner said on LinkedIn that the deal with Motive Partners ends "speculation that a direct competitor would acquire the business in what would have been a consolidating transaction."
In July, Fiserv closed a deal
to acquire First Data, one of the largest processors of credit and debit card payments, for $22 billion. Fintech expert Lex Sokolin said the purchase made it clear that Fiserv's primary bet is on banking and payments rather than investments.
"Banking and payments are currently a stronger narrative … while robo-advice and wealth management software are becoming more established and less hot," Mr. Sokolin said in an email.
He called the deal for the investment services unit a smart, opportunistic move for Motive that will help Fiserv focus on its core mission.
"Standing up a competitor to Envestnet, BlackRock or Morningstar requires a deep pocket, and one much more focused on wealth management and digital wealth," Mr. Sokolin said.
