Tungsten Agrees to OB10 Buyout, Also Combines a Bank and Analytics Capability Into IPO Candidate
Yesterday, Spend Matters reported on a Financial Times story that suggested Tungsten was set to acquire OB10 and combine the e-invoicing supplier network provider with other assets in preparation for a public market flotation (IPO) this year. Today, this information was confirmed and reported in a number of wire and media sources. The RTT news article, Tungsten Plans To Float In LSE; To Buy OB10 Limited, provided and confirmed a number of elements about the deal:
- “Tungsten announced the conditional acquisition of OB10 Limited, a global business-to-business or “B2B” e-invoicing network, for 99 million pounds in cash and shares”
- “Tungsten Corporation plc. said that it plans to seek admission to trading on the AIM market of the London Stock Exchange”
- “Tungsten also noted that it has signed a 5 year rolling licence agreement with @UK PLC to deploy its analytic software technology to enable TungstenAnalytics to be delivered across Tungsten’s global e-invoicing network following the acquisition of OB10”
- “Tungsten also announced its agreement to acquire an identified duly authorised UK bank, whose assets solely comprise short term UK gilts and / or certificates of deposit to specialise in the provision of supply chain financing”
- “Tungsten is proposing to raise gross proceeds of up to 160 million pounds pursuant to a placing of new ordinary shares”
- “Tungsten will be led by Edmund Truell as Group CEO … and supported by the executive management team of Luke McKeever, Philip Ashdown and Jeffrey Belkin.”
The prospectus (US equivalent of an S-1 document) for the combination and transaction can be found on the FT website via this link. Select additional highlights from the prospectus include:
- “The strategic vision of Tungsten is to create a leading cloud based global trading network, monetising the existing OB10 e-invoicing platform with the addition of value added services such as seamless electronically secure encrypted invoice discounting against “approved for pay” invoices, substantially reducing fraud and dilutions risks so evident in traditional “old model” supply chain finance; and the provision of spend analytics technology across OB10′s established network.”
- “The Transaction will initially be effected by the acquisition of OB10 by Tungsten and Admission. Tungsten’s 5 year rolling licence for TungstenAnalytics agreed by Tungsten and @UK PLC (the “License”) will become live upon Admission and the payment of the agreed establishment fees and installation costs (together not expected to be greater than £0.5m). The acquisition of OB10 is conditional upon, inter alia, final Tungsten board approval and Admission becoming effective. The acquisition of the Bank is subject to PRA approval, and this process will not prevent the acquisition of OB10, the Placing or Admission becoming unconditional.”
- “Under the Tungsten model, once an invoice has been marked by a buyer as “approved for pay”, the supplier will be able to choose to receive an early payment at a discount to the invoice value. The ability to see which invoices are ‘approved to pay’ through OB10′s technology is a differentiating factor, providing full transparency and reduce the key financing risks of fraud and dilutions. Bad debt provisions are also expected to be managed and minimised through the investment grade nature of the buyers on the OB10 network (who would become the counter party once a supplier has chosen the invoice finance option). Invoice financing in Express Payments has already been trialled with an OB10 customer and alongside another lender…”
- “TungstenAnalytics: Tungsten has signed a 5 year rolling agreement with @UK PLC to deliver TungstenAnalytics, a comprehensive and innovative line level spend analytics solution, to be applied to the invoice data transacted over OB10′s network.”
We think that there are some potentially game-changing aspects to the combination of the assets, including the ability to natively finance early payment discounts through a network (without requiring outside partners or capital). But as interesting is the concept, proposed above, of TungstenAnalytics, which would be applied to the “line level” invoice data of OB10.
Line level analytics is the Holy Grail of spend analysis, and it’s something in the area of indirect (e.g., IT, MRO, office supplies, etc.) that few companies are able to access except for a handful of suppliers where they manually gather invoice data from suppliers for each spend refresh (typically quarterly or monthly). Line level detail is much more common for direct spend given the richer detail contained from ERP/MRP systems and POs in traditional spend analysis toolsets (owing to the challenges of getting invoice data from suppliers).
Spend analysis applied to broad network data on the line-level is likely to surface opportunities for many companies that are typically missed in traditional spend analysis efforts and could further increase the value proposition of joining a supplier network in the first place (or even adding in a network as a “separate hop” to capture the information exhaust from buyer/supplier transactional information).
Spend Matters PRO subscribers can access related analysis below:
And two public Spend Matters essays:
Disclosure: OB10 and Tungsten are clients of Spend Matters or Spend Matters affiliate companies.
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