The Praemium Ltd (ASX: PPS) share price could come under pressure this morning after the financial technology business announced some disappointing news.
Praemium is one of the world leaders for providing investment administration, Managed Account and financial planning technology platforms. It currently reports on over 500,000 investor accounts covering over $140 billion in funds globally and provides services to more than 1,000 financial institutions and intermediaries.
Why Praemium shares could be under scrutiny
Praemium has recently been notified that one of its key clients will be leaving for an alternative supplier.
ANZ Private, a division of Australia and New Zealand Banking Group (ASX: ANZ), is the client in question and it is responsible for 8% of Praemium’s revenue, amounting to $4 million. It’s expected that ANZ Private will transition from the new financial year.
However, whilst the loss of ANZ Private was unfortunate, Praemium did say that there have been other contract movements that are positives.
Praemium’s Positive Update
The fintech has signed a major contract extension with Shaw and Partners, one of Australia’s largest investment and wealth management firms with over $16 billion of assets under advice.
Shaw and Partners have extended their existing Virtual Managed Account (VMA) contract for five years with an option to extend for a further five years. The relationship has also been expanded to include portfolio administration for over 2,500 client portfolios which was previously done internally.
The new Shaw and Partners agreement has increased the value of the contract by $1 million per year.
Praemium CEO Michael Ohanessian said of Shaw and Partners, “They have built a highly compelling business model with a great range of professionally managed model portfolios alongside other bespoke solutions.”
Praemium also said that Morgan Stanley Wealth Management Australia is now utilising all of the products and services available through the Integrated Managed Accounts platform, worth $1 million per year. Asgard Capital Management also renewed its contract for up to six years, with a contract value of at least $3 million a year.
There’s a good chance Praemium shares may fall in response to this news. Not only is it a sizeable loss of revenue, but it shows its client base may not be as sticky as expected if there’s a better competitor.
Instead of Praemium, I would rather invest in one of the fast ASX growth shares revealed in the free report below.
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