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Moody's (MCO) Closes 360kompany Deal, Enhances KYC Capabilities

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Moody’s (MCO - Free Report) closes the buyout of 360kompany AG. The deal is expected to further strengthen its Know Your Customer (KYC) capabilities.

After acquiring Bogard AB in November 2021, Moody’s acquired PassFort Limited in December and inked the deal to buy 360kompany.

360kompany is a Vienna, Austria-headquartered platform for audit-proof business verification and KYC. The firm operates a network of primary source information on more than 115 million companies across 200 jurisdictions. The platform will help Moody’s clients to do comprehensive shareholder analysis and entity verification in real-time. Further, it will help retrieve original company filings and documents to meet their regulatory demands.

Unlike funding the PassFort deal with cash, the buyout of 360kompany was funded through a combination of cash and shares of Moody’s.

Like PassFort, 360kompany is a provider of onboarding and KYC technology solutions. Hence, its acquisition is expected to further support Moody’s technology, data and analytical capabilities. It will augment MCO’s “industry-leading customer solutions for KYC, anti-money laundering, compliance, and counterparty risk” and is part of an effort to fortify Moody’s Analytics (“MA”) division’s profitability.

Further, following its integration into the MA division’s KYC business, it will expand “the Orbis company database and the GRID database of risk profiles, adverse news, politically exposed persons, and sanctions.”

Our Take

Over the past several years, Moody’s has been enhancing its investments in compliance and the KYC space. This includes the acquisitions of Bureau van Dijk (2017), RDC (2020), Acquire Media (2020), and Bogard and PassFort (2021).

Now, with the latest acquisition, Moody’s will be able to address more compliance-related challenges. Also, it takes the company a step closer to perpetual KYC (pKYC). While MCO’s existing solutions track entity risk information and emerging risks, a more all-inclusive approach is needed to deliver pKYC on a real-time basis, which is expected to be generated through the integration of PassFort and 360kompany with the MA division.

Also, such transactions are expected to keep helping the company diversify its revenues and be accretive to earnings. Moody's will continue to pursue opportunistic deals that are strategic fits and complement its existing operations.

Over the past year, shares of Moody’s have gained 15.9%, outperforming the 10.5% rally of the industry.

 

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Currently, MCO carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Inorganic Growth Efforts by Other Finance Firms

In December 2021, Ally Financial (ALLY - Free Report) acquired the digital-first credit card company Fair Square Financial. ALLY had signed the deal to buy Fair Square for $750 million in cash in October.

The transaction will advance Ally Financial's evolution as the leading digital consumer bank, providing frictionless and innovative products to its growing customer base. Further, the deal is expected to enhance the company’s ability to grow and deepen customer relationships and provide access to the $1-trillion credit card market.

Valley National Bancorp (VLY - Free Report) completed the previously announced merger deal with The Westchester Bank Holding Corporation. In June 2021, VLY entered an agreement to acquire Westchester to expand its presence.

The acquisition is expected to provide Valley National with a physical footprint and additional commercial lending expertise in the Westchester County market. With Westchester's branches, Valley National will now have 233 branches in total.


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