Axios Pro Exclusive Content

Short seller Hindenburg goes after Temenos

headshot
Feb 15, 2024
Data: Capital IQ; Chart: Axios Visuals
Data: Capital IQ; Chart: Axios Visuals

Short seller Hindenburg Research has found a new target: Temenos.

Why it matters: Shares of the banking software company shed 26.5% in trading Thursday morning after Hindenburg, which has gone after Block and Icahn Enterprises, unveiled a scathing report.

Zoom in: The report accuses Temenos of manipulated earnings and "major" accounting irregularities.

  • Citing litigation records and conversations with unnamed, former Temenos executives, Hindenburg alleges the company funded the purchase of its own software in 2021.
  • That year, Mbanq signed a deal to buy $20 million in software and services from Temenos. Hindenburg alleges that Temenos made a convertible note investment of around the same size into Mbanq at the same time — without which Mbanq could not buy its services.

By the numbers: The market capitalization of Temenos now rests around CHF 4.7 billion ($5.3 billion), after having hit a one-year high of around CHF 6.4 billion ($7.3 billion) in January.

The bottom line: Temenos is under pressure to make serious changes.

  • It sought private equity buyers in early 2023 after prior talks fell apart over pricing. Reports indicated that EQT, Permira, Nordic Capital, KKR and Thoma Bravo were considered potential suitors.
  • Activist shareholders have also hauled the company over the coals, with former CEO Max Chuard resigning in January 2023.

Temenos did not respond to a request for comment by press time.

Go deeper