Business software group SAP (SAPG.DE) said on Tuesday it was forming a joint venture with Munich-based investor Dediq to develop new digital solutions for banking and insurance.
Under the deal, Dediq will invest more than 500 million euros ($595 million) in developing premium products for financial services while SAP will contribute intellectual property in return for a 20% stake.
The partnership comes as SAP, under the leadership of CEO Christian Klein, seeks to shift its user base more quickly into the cloud and, in financial services, stay relevant at a time of digital disruption.
“What we want to deliver is a financial services industry speedboat,” Luka Mucic, SAP’s chief financial officer, told a news briefing.
As a minority shareholder in the venture, SAP will not consolidate its results, said Mucic. He added that SAP still expected to reap net benefits from licensing its core database and cloud platform technology to the company.
Forming an alliance rather than investing cash to develop a premium financial services offering reflects SAP’s strategic priorities. Spread across 25 industry verticals, SAP says it is playing to win in some sectors but is also open to partnerships in others.
Dediq is an eight-year-old private portfolio investor that has built up a portfolio of seven companies. Two of its companies have been publicly disclosed: Senacor is an information technology services firm and Convista is an SAP-focused consultancy.
“Our approach is to do entrepreneurial investments with evergreen capital,” said Managing Partner Matthias Tomann, outlining Dediq’s long-term approach.
Mucic forecast that the joint venture would generate revenue in the high triple-digit-millions euros or more within five years of being founded. Pending anti-trust approvals, the joint venture should go live in the second half of this year.