CheckFree SMA unit buys wounded IDS

Thomas Coyle

5 September 2005

Money-troubled IDS to merge with CheckFree's APL division. E-billing giant CheckFree has acquired Integrated Decision Systems for about $18 million. CheckFree says IDS – a New York-based provider of portfolio-management systems to asset managers and investment-program sponsors – will become part of its CheckFree Investment Services unit, which provides separately managed account processing and connectivity support to asset managers, brokerages and financial consultants.

CheckFree’s purchase of IDS had been in the rumor mill for months. In June IDS hit the skids when its venture funding ran dry. Unable to meet its payroll obligations, it laid off about 70 of its 80-member workforce, according to sources.

“The combination of CheckFree Investment Services and Integrated Decision Systems delivers strong benefits for both organizations and their respective customers,” CIS general manager Alex Marasco says in a press release.

Connectivity

Portfolio processing and connectivity are vital to the smooth running of SMA programs, largely because of the sheer number of individual accounts and the need for continuous communication between managers and sponsors.

CheckFree says the purchase of IDS gives asset managers who use CIS’ APL processing platform “links to a larger network of broker-dealer organizations” while providing IDS’ software users access to APL.

“The deal gives additional technology, including new retail brokerage performance reporting tools to participants in the industry large-scale performance reporting,” says CheckFree.

In terms of “additional technology,” Jersey City, N.J.-based CIS may be especially keen on IDS’ GIM2 multi-currency accounting engine. CIS has promised to enhance its multi-currency capabilities through EPL, its “next-generation” processing platform.

The merger alters the SMA processing and connectivity landscape. With IDS is out of the picture , the only players left are CIS and two much smaller firms: Edison, N.J.-based Market Street Advisors and Wakefield, Mass-based Vestmark. –FWR

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