Evenlode Income managers Hugh Yarrow and Ben Peters have taken a stake in UK tech group Fidessa. The company, which has a current dividend yield of 4.5%, is a global market leader in providing critical software to investment banks, brokers and asset management firms. Like all Evenlode holdings, Fidessa is capital-light, with free cash flow regularly returned to investors. Yarrow says 85% of Fidessa’s revenue is recurring and renewal rates are more than 99%.
“Its long-term growth potential is good as customers look to improve efficiency, cope with regulation and compliance, and cut costs,” he says. “Fidessa is making a significant investment in its new derivatives offering. Current earnings would be approximately 40% higher if Fidessa stopped this investment and just focused on its existing equity platform, but we would rather it continued with this project - the long -term potential is excellent.”