Private equity firm Warburg Pincus has entered into an agreement to acquire 35% stake in Avaloq in a transaction that values the banking software company in excess of CHF1bn ($1.01bn).

The stake will be acquired by an affiliate of Warburg Pincus from the Avaloq’s founders, management and employees.

However, detailed financial terms of the transaction are not being disclosed.

The transaction is seen as the first step towards a potential public listing of the Swiss-based Avaloq in the coming years.

Warburg Pincus managing director and head of Europe Daniel Zilberman said: “With its focus on innovation, we believe that Avaloq is uniquely qualified to take advantage of growing demand for cutting edge software and outsourced services in the financial industry.

“We look forward to partnering with Francisco, Jürg and the rest of Avaloq’s talented team as the company enters a new and exciting stage in its international growth path.”

With an investment horizon of 7 years, the deal enables Avaloq to bring in an experienced partner to help facilitate its next phase of growth.

Following the transaction, Avaloq founder and chief executive officer Francisco Fernandez will also assume the role as the company’s chairman.

The acquisition is expected to be completed in the second quarter of 2017.

Avaloq deputy chief executive officer and group CMO Jürg Hunziker said: “In evaluating potential partners to support us with our growth strategy, we put special emphasis on company culture, and Warburg Pincus perfectly matches the Avaloq values.

“They will enable our team to provide the best possible digital banking technology and innovative services also in the future.”

Avaloq earned a revenue of CHF533m ($536m) in 2016, up 10% compared to CHF485m ($488.5) generated a year earlier.

Image: The stake will be acquired by an affiliate of Warburg Pincus. Photo: courtesy of stockimages/