A Yodlee sale could land Envestnet up to $400M
Sale of data aggregator won't disrupt Envestnet’s operations, according to JPMorgan
Wealthtech giant Envestnet is reportedly exploring the sale of its data aggregation subsidiary Yodlee as it aims to refocus strategic operations.
A potential sale, first reported on Dec. 13 by Bloomberg News, could generate between $300 million and $400 million for Envestnet, according to a JPMorgan report published Dec. 14.
Envestnet bought Yodlee in 2016 for roughly $600 million. The data company generates $160 million in annual revenue, with EBITDA margins of 10% to 20%, the report stated. The sale could cost the wealth management tech provider roughly $200 million in losses.
Rumors of a Yodlee sale also surfaced in 2020.
JPMorgan’s report noted that while much of Yodlee’s data drives Envestnet’s core wealth business, a sale would not be disruptive as Envestnet Wealth Solutions and Envestnet Data and Analytics boost revenue.
The financials
Envestnet’s shares jumped by more than 5% to close at $48.47 on Dec. 14 closing. The stock closed at $47.45 today and the company has a market capitalization of $2.59 billion.
Envestnet’s stock will experience a “positive market reaction to the fact that a sale would remove a revenue-lagging segment and may increase Envestnet’s strategic focus rather than expectations of a lofty sales price,” according to a Dec. 14 Morningstar report.
Envestnet’s shares have dropped by 23% year-to-date. The company reported a 3% year-over-year increase in revenue to $316 million in the third quarter. The company has a market cap of $2.59 billion.
A legal tussle
Yodlee is the defendant in an ongoing $100 million legal suit brought by financial data technology company FinancialApps in the U.S. District Court for the District of Delaware for using proprietary information to develop competing credit risk assessment software after the companies entered into a data-sharing agreement in 2017.
The monetary damages that FinancialApps is seeking are “significant,” according to an Envestnet Sept. 30, 2023, 10-K filing.
An Envestnet spokesperson told Bank Automation News: “It is our policy not to comment on rumors or market speculation.”
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