Technology outsourcing and consulting major Accenture plc (ACN) recently completed the acquisition of Zenta, a provider of residential and commercial mortgage processing services. Financial terms of the buyout, which was announced back in August, remained undisclosed.
Founded in 2000, Zenta is a top-notch knowledge and business processes outsourcing company, offering a full range of residential mortgage fulfillment and loan servicing support, commercial real estate, capital market analytics, commercial loan underwriting and servicing support, finance and accounting, asset management, collections and contact center services. It serves four of the top five U.S. banks.
With Zenta under its umbrella, Accenture will be able to help lenders and services and real estate investment trusts (REITs) to upgrade and streamline their operations, improve customer experience and boost profitability in new markets. Accenture’s outsourcing capabilities will also be enhanced with through Zenta operations.
Leveraging new capabilities from the acquired unit, Accenture has already unveiled “Accenture Credit Services.” The service is targeted at consulting, technology and outsourcing capabilities of firms operating in the residential mortgage, commercial real estate, leasing and automotive finance industries.
Currently, mortgage lenders are incurring huge costs related to risk management, forcing financial institutions to bring about changes in their loan origination and servicing/loss mitigation operations. The acquisition is expected to enhance the company’s competence in the field of commercial mortgage processing.
Over the past year or so, Accenture has made a number of acquisitions with the intention of rounding out its portfolio and expanding into new areas. Earlier this year, the company signed an agreement to acquire property and casualty insurance solutions provider, Duck Creek Technologies, for an undisclosed amount.
We are encouraged to see Accenture make investments for growth in a turbulent economic backdrop and expect the company to emerge stronger when market conditions improve. In the meantime, Accenture's brand, strong client relationships and core capabilities will stand in its favor, enabling it to win a significant number of deals across different verticals.
Accenture’s fourth quarter results were mediocre, with the bottom line modestly beating the Zacks Consensus Estimate. Based on the improving business momentum and market share gains, Accenture provided an upbeat revenue and earnings guidance for fiscal 2012.
However, increasing competition from International Business Machines Corp. (IBM), a strained spending environment and Accenture’s broad European exposure may temper growth prospects to some extent.
Currently, Accenture has a Zacks #3 Rank, which implies a short-term Hold rating.
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