Japanese Internet investor buys 10% stake in Cognotec

The Irish financial software company, Cognotec, has received a cash injection of $20 million (€18.5 million) from a leading Japanese Internet investor. The investment gives Softbank Corp a 10 per cent stake in the Irish firm, valuing it at €185 million. In July 1998, US technology venture capital company Warburg Pincus, a division of Credit Suisse, took a 22 per cent stake in the Dublin-based firm.

Cognotec's founder and chairman, Mr Brian Mac Caba, said he was delighted with the investment. He said its significance lay in the confidence being expressed in the company by such major venture capitalists.

"It is very exciting for an Irish company to attract the top pure-Internet investor," he added. "It proves that you can attack the global market from this country."

Softbank is the largest shareholder in the Internet search engine, Yahoo! - its 28 per cent stake, bought some years ago for $100 million, is now worth more than $9 billion. The company also holds a large stake in E*Trade.

In a statement, Mr Yoshitaka Kitao, Softbank's chief financial officer, said the investment was part of his company's policy of seeking partnership with "the very best Internet technology and e-commerce" companies.

"It is our belief that Cognotec's vision of an e-commerce-enabled global foreign exchange industry will become the dominant model in the provision of automated trading technology. We are proud to be a part of that process," he added.

Mr Mac Caba said: "Softbank's investment represents a milestone in Cognotec's development as a leading company in the business-to-business e-commerce space. Further, Softbank's unparalleled expertise in the e-commerce industry is a welcome enhancement to our skills base."

Cognotec makes software that allows banks to automate their dealing systems, and includes UBS, First Union and National Australia Bank. The company says its market share is now over 50 per cent, and that it was recently voted Best Automated Dealing Software provider by the global readership of FX Week magazine for the second year running.

Last night, Mr Mac Caba denied that the latest financing was a "mezzanine round" before a stock market flotation, but said he would not rule out an initial public offering in the future. He said the company currently had an annual turnover of around €18.5 million.

Mr Mac Caba, who founded the company in 1990, would not say how much of Cognotec he still holds, but added that he remains the largest single shareholder in Cognotec and has "more than Warburg Pincus", which has 22 per cent. The Warbug Pincus stake is worth over €40 million (£31.5 million) on the basis of the buy-in from Softbank.

Most of the company's 180 staff, who are largely based in Dublin, also hold shares in the company, he added.