The feeling is mutual at DST Systems. A leading provider of information processing software and services for the mutual fund industry, DST's Financial Services segment, which accounts for about half of sales, processes millions of mutual fund accounts and offers software, systems, and processing services for banks, investment firms, and insurance companies. The company's Output Solutions unit manages statement and bill mailings as well as customer communications. Its applications and services are used to address a wide range of tasks including business process management, investment management, customer care, and health care claims processing and administration. DST Systems generates most of its sales in the US.
The company has historically been very active on the acquisition front, using selective purchases to complement its product line and strategically expand into new geographic areas. In July 2011 DST agreed to pay $250 million for ALPS, a company that performs technology and back-office functions for financial services firms. A couple of weeks prior it acquired the assets of IntelliSource Healthcare Solutions, a developer of software for health insurance providers. In June it bought Subserveo, a Canadian provider of compliance and surveillance services to broker-dealers, and in May it bought Newkirk Products, a company that performs communications services -- writing statements and reports -- for financial service firms. Its first acquisition of 2011 was consultancy Finix Business Strategies and enterprise social networking software developer Finix Converge.
At the same time as the Finix acquisition, DST established a subsidiary known as DST Brokerage Solutions to oversee Finix's operations and products, and focus on broker-dealer clients. The new company will offer applications for brokerage subaccounting, business practice management, business social networking, among others, as well as consulting services. Subserveo, which was rebranded DST Subserveo in Canada, was made part of DST Brokerage Solutions.
DST also owns a stake in Boston Financial Data Services, a 50/50 joint venture with State Street. Boston Financial is DST's largest customer, accounting for about 8% of its overall sales in 2010. Another partnership with State Street, International Financial Data Services, provides transfer agency services to mutual funds set up in Canada and the tax-friendly countries of Ireland and Luxembourg.
While the US accounts for some 90% of revenues, DST's second-largest market is the UK, which made up 6% of sales in 2010. In the UK, DST operates through Innovative Output Solutions Limited (IOS), a subsidiary formed in July 2010 when it merged its DST Output with dsicmm Group Limited. The next year, in August 2011, IOS bought Lateral Group Limited for an undisclosed amount. Lateral Group offers marketing services such as database marketing, digital media. campaign management, print management, and online trading facilitation. DST is also eyeing expansion in Australia and Asia. It has balanced its acquisition strategy by purchasing both complementary software and technology providers as well as service providers, with a particular emphasis on buying business process outsourcing (BPO) and consulting firms.
DST is also involved in real estate and equity investments in various companies, although that segment only accounted for 2% of DST's sales in 2010 (and much of that involved leasing real estate to other business units of the company).
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