Morgan Stanley has shelled out $0.9 Bn to obtain stock-plan firm Solium Capital. The acquisition of Solium Capital that mainly specializes in offering Software-as-a-Service (SaaS) for managing employee share plans; ‘financial reporting and compliance’ is predictable to bolster Morgan Stanley’s wealth management business. This has been termed as the biggest acquisition that the bank has made in the last decade. It is pertinent to mention that Solium boasts of 3,000 stock plan clients, nearly ten times more when evaluated to Morgan Stanley, and also some of Solium’s clients comprise of tech startups such as Stripe and Shopify.
With the tech sector utilizing a younger worker on an average when evaluated to other industries, Morgan Stanley is hoping the gaining will facilitate it in reaching a younger demographic, as per a statement from the firm’s CEO, James Gorman. He said that the acquisition offers Morgan Stanley with broader admission to corporate clients and an unswerving channel to their employees, as well as an excellent chance to practice and develop relationships with younger millennials and service this population early in their wealth collecting years.
As per the Wall Street Journal, Morgan’s present stock-plan business has been concentrating on senior executives as objected to the rank-and-file. With the addition, the bank will be able to serve younger employees at startups who circumvent traditional financial firms.
Morgan Stanley has acquired all of Solium’s issued and prominent common shares at CAD 19.15 a share, a 43 percent premium. Solium is placed on the Toronto Stock Exchange although the purchase will not change Solium’s operating structure. Solium will still be working from Calgary, Canada. Morgan Stanley will be subject to customary closing requirements such as ‘court, Solium shareholder and regulatory approvals.’
The following is essential as banks came under regulatory limitations following the global financial crisis of 2008. It is only with the Trump government that these regulatory pressures have started to slacken. According to the Journal, regulators are unpropitious to be a stumbling block in this instance. This is because Solium Capital as a bank’s purchase target would be acknowledged a ‘steadier, less risky’ business.
Though the acquisition of Solium is prominent for Morgan Stanley since the global financial problem over a decade ago, it has not presented itself as a shock. While declaring Q4 and full year 2018 results, Gorman betokened that the bank was ‘well placed to pursue growth possibilities.’