A consolidation wave is reshaping the EMEA PAS vendor landscape
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4 January 2016Nicolas Michellod
At Celent, we have been writing reports profiling policy administration system (PAS) vendors for a long time. In the European, Middle East and African region (EMEA) we have covered up to 50 vendors in some of our bi-annual reports and we know there were approximately twice more active in this region of the world. The most recent report focused on life PAS in EMEA can be found here. Since our first look at the PAS market in the EMEA region in 2007 we have predicted that its fragmentation and its heterogeneity would lead to a consolidation. It is fair to say that we have been wrong with our prediction or without less humility we can say we have been right but our timing was bad. Indeed, it seems that the consolidation phase we predicted has started to materialize a few year ago but certainly not as early as we thought. In other words we have observed a surge in mergers & acquisitions over the past few years and we think it will still accelerate in the coming months. The most recent acquisition that validates our view is the acquisition of the Danish vendor Edlund by KMD Group that has been announced this week. Overall we see various kinds of acquisitions:
- Software integrators-driven acquisitions: large software integrators are trying to diversify their service offering through the acquisition of insurance system IP. The best example of this type of strategic move is for instance the acquisition of Wyde by MphasiS a few years ago.
- The Private Equity (PE) firms-driven acquisitions: there is a growing interest to invest in the insurance core system space for PE firms. The best examples of this type of acquisitions are the contribution of Riverside in the merger between Charles Taylor and Fadata or Waterland Private Equity investment in Keylane that now combines activities of various PAS vendors including formerly branded LeanApps, Quinity, Mantcore and more recently the German vendor called Geneva-ID.
- The core system vendor-driven acquisitions: PAS vendors understand they can grow quicker if they merge with a competitor. Sapiens acquisition of FIS Software and IDIT or Prima Solutions acquisition of Albiran a few years ago are good examples.