FD Technologies has announced an agreement to sell its First Derivative business to EPAM Systems, Inc. for £230 million ($290 million), in a deal expected to close by the fourth quarter of 2024, pending shareholder approval. The Northern Irish technology firm is restructuring to streamline its operations and focus resources on its KX division, which specializes in real-time data analytics and AI solutions.
Strategic Shift Towards KX Analytics
The decision to divest its First Derivative unit is the result of a strategic review that began in March. Seamus Keating, Group CEO at FD Technologies, emphasized that the move is beneficial for all stakeholders, enabling the company to concentrate on the growth of KX and return excess cash to shareholders.
“This divestment is positive for all stakeholders,” Keating stated. “It allows the Group to prioritize KX and provides the resources needed to deliver on our ambitious growth plans while also enabling us to return excess capital to shareholders.”
Financial Impact and Future Plans
The transaction is expected to generate approximately £205 million in net proceeds after adjustments and transaction-related costs. FD Technologies plans to use part of the funds to pay down £20 million in net debt, with the remaining amount earmarked for shareholder returns. The company will provide further details on its capital allocation strategy in November.
In the first half of the 2025 fiscal year, which ended on August 31, both the KX division and the First Derivative Business met expectations. KX added £7.4 million in annual contract value, while the First Derivative Business contributed approximately £79 million in revenue, maintaining a steady performance from the previous fiscal period.
For the entire fiscal year 2024, FD Technologies reported a total revenue of £248.9 million. The KX division was a standout performer, achieving a 12% revenue increase in constant currencies and a 19% rise in recurring revenue, which now makes up 86% of the KX division’s overall revenue, up from 81% last year.
EPAM Systems’ Perspective
Balazs Fejes, President of Global Business at EPAM Systems, expressed optimism about the acquisition, stating that integrating the First Derivative Business will create new opportunities for clients and employees.
“Combining EPAM with the First Derivative Business marks the beginning of a distinctive enterprise that will not only enhance value for our clients but also foster significant growth opportunities for our teams,” said Fejes.
Next Steps
The sale is contingent on approval at FD Technologies’ upcoming general meeting, scheduled for October. The company will outline more details about its strategic direction and trading performance in its interim results set to be released in November.
The divestment represents a significant step in FD Technologies’ strategy to simplify its business model, focus on high-growth areas, and maximize shareholder value as it advances its position in the analytics and AI sectors.
