M Partners analyst Ron Shuttleworth says the Solium Capital’s (Solium Capital Stock Quote, Chart, News: TSX:SUM) acquisition of IP from Computershare could be impactful, but not right away.
Yesterday, Solium announced that it would the acquire the RSSOne property from former shareholder Computershare for an undisclosed amount. The pickup consists of a suite of services for Rule 10b5-1 and Rule 144 management. 10b5-1 and Rule 144 are rules are SEC regulations that pertain to insider trading and the the sale of restricted and controlled securities without registration, respectively.
CEO Mike Broadfoot says the deal will open doors to new business.
“With this acquisition, Solium gains a significant amount of technology and intellectual capital in the Rule 10b5-1 and Rule 144 management area, and in the venture capital processing space,” he said. “We also gain the opportunity to serve clients who leverage this technology as part of their executive service offerings, further expanding our relationships with the brokerage community and the solutions we are able to provide to them.”
Shuttleworth believes the cost of the acquisition was in the hundreds of thousands of dollars. He sees this as a “wedge” solution for penetrating key American wealth management accounts. While he expects the biggest impact of this acquisition will come after it has been integrated next year, he notes that all six of the customers are tier one wealth managers (such as JP Morgan) and key targets for Solium’s U.S.expansion. In a research update to clients today, Shuttleworth reiterated his BUY rating and twelve-month target price of $4.75 on Solium.
Solium Capital helps companies sort through the regulatory tangle that is equity-based compensation. This type of remuneration, which 97% of companies offer their employees, is extremely complex because of changing regulatory environments, employee churn and localized rules. Solium Capital, which has largely concentrated its effort in the Canadian market, boasts 75% of the top 100 companies listed on the TSX among its clients.