The e-invoicing, procure-to-pay (P2P) and trade financing markets in the Nordics just got a lot more interesting. Earlier Tuesday, OpusCapita, which is not well known outside of the Nordics yet has more than €250 million in annual revenue, announced it would acquire catalog management and procurement specialist jCatalog.
The terms of the deal were not disclosed, other than that “the agreement has been closed on 25 April 2016.” Spend Matters analysis of recent market deals in the procurement market and those relate to it would suggest a likely top line multiple of between 3–4X, given a primarily SaaS business model. In this case, we would guide down at the low level or even slightly under this range, given jCatalog’s emphasis on supporting multiple implementation scenarios, including enterprise software.
OpusCapita specializes in accounts payable (A/P) automation, treasury management and the emerging market for trade financing (primarily through a reverse factoring model, funded with third parties and partner solutions combined with their own services and techniques). It also, like Basware, has had limited (and regionally focused) purchasing automation capabilities, and has lagged behind specialist e-procurement providers like Coupa, Ariba/SAP and others in the broader U.S. and European markets.
Here are some additional highlights from the announcement:
- The transaction will “strengthen [OpusCapita’s] buyer-supplier ecosystem offering and to expand its geographical reach.”
- “jCatalog is a leading provider of software solutions for procurement and the product information management and distribution. jCatalog Software AG is headquartered in Dortmund, Germany and has operations in Europe and in the USA with some 130 professionals. The company serves over 250 customers including large global companies such as Liebherr, Rossman, IBM, Audi, Schindler and Maersk. The net sales of the jCatalog in 2015 was EUR 10 million.”
- “The acquisition supports OpusCapita’s strategy to build a global buyer-supplier ecosystem offering. jCatalog’s solutions in the areas of eCommerce, catalog management, procurement process and supplier management will complement OpusCapita’s extended purchase to pay offering which includes invoice automation, cash management, financing and connectivity.”
- “OpusCapita digitalizes and automates purchasing, invoice handling and payments, as well as cash management and supplier financing. With 200 million electronic transactions processed annually, and 8,000 customers in 54 countries, we have the expertise to make buying and paying easier and more cost effective. You get end-to-end visibility, control and compliance of your spend and cash flow. In 2015 OpusCapita’s net sales were EUR 257 million and had 2,000 professionals. Founded in 1984, OpusCapita is headquartered in Espoo, Finland and is fully owned subsidiary of Posti Group.”
Posti, in case you were wondering, is the Finnish mail service, which may sound ironic but is not so, if you consider the origins of e-invoicing and value-added tax administration (VAT).
Spend Matters Take
We will be covering the announcement in more detail in a forthcoming PRO brief on the combination, but three things come to mind in our initial take.
First, the announcement is clearly a shot across the bow of Basware, which has been more aggressive in its global expansion efforts (especially in Europe) in the e-invoicing, supplier network and trade financing areas. Basware and OpusCapita will increasingly find themselves in competition outside of their historical overlap in Nordic accounts payable automation and e-invoicing accounts. Incidentally, Basware has been acquisitive in the procurement area as well, acquiring ProcServe to target the U.K. public sector and recently Verian to expand its P2P capabilities and gain a broader foothold in North American e-procurement. Curiously, both OpusCapita and Basware have invested materially in trade financing (receivables and payables financing).
Second, the solution will give OpusCapita a lot more product than meets the eye. Spend Matters has long been a fan of jCatalog’s products, even if it has not been as well known as its peers, thanks to limited sales and marketing reach. We would encourage Spend Matters PRO subscribers to read our related articles, below, for further insight into jCatalog’s capabilities, especially around complex ERP procurement enablement, as well as basic and specialized catalog management scenarios. Curiously, the sell-side and configuration abilities of jCatalog may also play well with the sell-side and network components of OpusCapita, targeting suppliers (but we’ll save the details on our opinion here for a future analysis).
And third, the deal could help cement a broader foundation for OpusCapita to target the pan-European market with an integrated P2P and trade financing capability. (Although we would also recommend that the firm pick up some additional assets to compete more strategically if it is truly interested in having an end-to-end P2P capability that touches all bases for large and middle market clients alike.) OpusCapita recently jettisoned its Baltic commercial assets and has told the market of its strategic intent to go after expanded opportunities in Europe. Yet within Europe, the challenge with jCatalog alone is the limited traction the provider has outside the German market, relative to many other firms aggressively ramping up sales and marketing throughout the U.K. and Europe.
OpusCapita will not only need to focus on synergies between its acquired assets and its own to gain a broader foothold in its target markets outside of A/P and treasury-centric offerings, it will also need to ramp up procurement-centered sales and marketing to help the product-led jCatalog team expand beyond its current markets. This, of course, says nothing about North America, where jCatalog is a “best kept secret” solution rather than a well-known procurement brand.
Finally, Spend Matters applauds the combination. We are particularly excited about the increased choice it will give European procurement and finance organizations in selecting the best-fit solutions for their business needs. We also believe it will drive further consolidation in the market among German, Austrian and Swiss procurement and P2P vendors, many of which are more at home selling based on capability and feature/function than investing in scalable sales and marketing efforts on a global basis.
Stay tuned for further coverage of the acquisition on Spend Matters PRO.