Exiger will look to potentially acquire new technologies to help accelerate its growth in the regtech market.
Regulation technology (regtech) and compliance services provider Exiger has announced it has received an $80 million investment from private equity firm Carrick Capital Partners, who will become a minority shareholder in the company. The investment is the first outside infusion of capital for Exiger, and it comes at a time when the regtech market is increasingly being eyed for investment.
Michael Beber, Exiger’s CEO and president, noted that the investment will be put towards building out the company’s product offerings, which currently include three core platforms: Insight 3PM, Risk360, and DDIQ. The DDIQ platform was acquired as part of Exiger’s purchase of OutsideIQ in April 2017.
“Our focus is really on enhancing and accelerating the sales of our existing products, which may mean adding new product opportunities that align with what we are doing already,” Beber said.
Indeed, being able to acquire more tech companies and their products was the main motivation for why Exiger, which has been self-funded up until now, agreed to bring in external investment.
“While we have been able to make smaller acquisitions… given our size, in order to make acquisitions that move the needle, they need to be somewhat larger,” Beber said.
As of yet, there are no concrete acquisition plans. But Jim Madden, CEO and co-founder of Carrick Capital Partners, said his firm “expects very rapid growth from Exiger” in the years to come. He added that Carrick decided to invest in the company because of Exiger’s ability to marry “deep subject matter expertise plus technology, and we think that is a unique combination.”
Exiger’s ability to stand out in the market, however, will be put to the test as more companies look to offer regulatory and compliance solutions. E-discovery companies like Exterro, Catalyst, Consilio and Advanced Discovery, for example, have expanded their technology to include more information governance capabilities, often to help clients comply with regulations like the EU’s General Data Protection Regulation.
These e-discovery companies may be moving to cater to more information governance needs, given how much investment capital the regtech market commands. Madden noted that “the amount of money people spent in this space is well over $30 billion.”
But Exiger is not too concerned about these new market entrants. Beber said that what e-discovery companies do is limited to information management, which Exiger does as well, “but we are also much more focused on solving unique problems our clients are facing in financial crime compliance.”
There are competitors beyond e-discovery companies also looking to gain a foothold in the regtech market. Financial services company SEI, for instance, launched an incubator in 2017 to help nurture the next generation of regtech companies and potentially invest in them. Meanwhile, IBM is looking to harness the power of its artificial intelligence Watson technology to develop a regulation research platform.
Exiger, however, doesn’t believe these market competitors pose much of a threat either. Beber noted that while there are “technology companies out there that are pursuing some of the same areas we are, their technology has not been trained by those who make their living everyday doing financial crime compliance.”