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Electric Times for Capital Markets FinTech – Our April M&A Report

Apr 15, 2019

Electric Times for Capital Markets FinTech – Our April M&A Report

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Dear Clients and Friends,

The capital markets FinTech World has been abuzz over a slew of m&a transactions – real and rumored. It started with Blackrock buying eFront for $1.3 billion. Then came the torrid IPO of Tradeweb Markets (part of Refinitiv – which was spun out of Thomson Reuters last year) and raised $1.1 billion in the second-largest U.S. IPO of the year -behind Lyft. (Normally we limit these reports to transactions during the prior month –but we can’t resist reviewing these more recent events.)

The report found here sets out m&a values and trends through March in the six segments of the FinTech world that we follow and sometimes lead. But some of the most interesting deals happened last week.

As noted, it all started with the Tradeweb IPO. It was hot: oversubscribed and priced near the high end of its previously estimated range – allowing the company to sell 40 million shares for $27 each – and then watch the stock soar to nearly $42 – a gain of more than 50%. The company is now valued at more than US$9bb – nearly 14x revenue. (Revenue of $178.6 million in the fourth quarter was up 56% from the year-ago period. Net income was $29.3 million.)

And that wasn’t the only news: Deutsche Bourse AG said week that it is in “concrete negotiations” with Refinitiv about the potential acquisition of its foreign exchange business units. FXall the largest of those units, has something like 2,300 institutional clients that trade on its platform. The rumored price is in excess of $3 billion. That plus the proceeds from the Tradeweb IPO should allow Refinitiv to make a dent in the $13.5 billion of debt they took on when the Blackstone-led consortium bought control of the unit in a $20-billion leveraged buyout last October. (We discussed that in last year in our September 2018 FinTech newsletter here.) The deal would be yet another complement DBAG’s FX trading assets including 360T, the unit it bought in 2016 for around $800mm and the GTX ECN business that DBAG bought from GAIN last year for about $100mm.

And if that weren’t enough, on April 9th, Deutsche Bourse announced yet another deal – announcing that it will buy control of risk management software provider Axioma in a complex transaction that valued Axioma at about $850 million – more than 8x 2018 revenue. The plan is to merge it with DBAG’s STOXX and DAX index businesses to form a new index and portfolio and risk analytics company. General Atlantic has agreed to invest around $715mm into the new company for a 19% stake and management will roll over equity to retain around 3%.

Meanwhile we announced our role in advising TradingScreen on the capital raise for its BidFX eTrading unit –with a substantial investment from the Singapore Exchange SGX. (See more here.) We are living in heady times.

You can see more about the trends and deals in FinTech m&a in the report found here. As you will see, values and volume in all six sectors of the FinTech world that we follow – and sometimes lead, remain strong. A few of the more notable transactions in March are:

  • BlackRock(NYSE:BLK) agreed to acquire eFront for $1.3bn,
  • Acko General Insurance (Mumbai, India) raised $65mm at a $300mm valuation in a Series C funding round,
  • Chime Bank (San Francisco, CA) raised $200mm in a Series D funding round,
  • Marlin & Associates’ client BidFX (London, UK), a subsidiary of TradingScreen raised $25mm from the Singapore Exchange Limited (SGX). Please click here for details.

Please see our April Fintech M&A Update here.

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