Broadridge Financial Solutions is to acquire Itiviti Holding (Itiviti), a provider of trading and connectivity technology to the capital markets industry, in an all-cash transaction valued at EUR2.143 billion (approximately USD2.5 billion) from Nordic Capital.
“The acquisition of Itiviti enhances Broadridge’s position as a global Fintech leader,” says Tim Gokey, Broadridge’s Chief Executive Officer. “By extending our capabilities into the front office and deepening our multi-asset class solutions, Itiviti significantly strengthens our Capital Markets franchise and better enables Broadridge to help financial institutions adapt to a rapidly evolving marketplace. Itiviti’s well-developed footprint in APAC and EMEA will increase our scale outside North America and strengthen our ability to serve our global clients.
“The acquisition is also expected to deliver value to our shareholders in the form of stronger recurring revenue growth, higher margins and higher Adjusted EPS. This incremental revenue and earnings growth positions us well to deliver at the higher end of our three-year growth objectives for recurring revenue and Adjusted EPS growth,” Gokey adds.
Itiviti is a leading global capital markets technology service provider offering highly scalable solutions that financial institutions use to consolidate their trading infrastructure, driving significant cost savings. With offices in 16 countries, Itiviti serves 24 of the top 25 global investment banks and over 2,000 leading brokers, trading firms and asset managers across 50 countries. Itiviti’s suite of Trading and Connect solutions offer comprehensive tools to support both connectivity and adaptivity to changing market dynamics and regulatory demands. The solutions and services offered provide financial institutions the flexibility and functionality to serve any trading style across asset classes.
Itiviti CEO Rob Mackay, says: “Joining Broadridge represents an exciting next chapter for our business and team by creating a leading front-to-back capital markets technology and operations provider. The combination of our technology, solutions and people will unlock significant value for our clients and drive long-term growth for our combined business.”
With a focus on front-office trade order and execution management systems, FIX connectivity and network offerings, Itiviti is highly complementary to Broadridge’s industry-leading post-trade product suite and other capital markets capabilities. This combination is expected to drive significant value to clients by enabling them to streamline their front-to-back technology stacks, increasing efficiencies, reducing risk and optimising balance sheet utilisation across equities, fixed income, exchange-traded derivatives, and other asset classes. With more than USD900 million in combined calendar 2020 revenues, Broadridge’s Capital Markets franchise will be even better positioned to help its clients adapt to increasing electronification and algo-driven trading and to mutualise non-differentiating functions to reduce their total cost of ownership.
In addition, Itiviti’s strong presence in APAC and EMEA will significantly expand Broadridge’s revenues outside of North America and enhance Broadridge’s international footprint in key markets. Itiviti’s blue-chip client base should also provide significant cross-sell opportunities across Broadridge’s product portfolio, further enhancing its long-term growth.
Itiviti generated recurring revenues of approximately EUR210 million in calendar year 2020. Its subscription-like revenue model delivers growing and high-quality recurring revenues. Upon closing, Itiviti will become part of Broadridge’s Global Technology and Operations segment and its senior management team, led by CEO Rob Mackay, will remain with the company to drive future growth.
“Itiviti has experienced a journey of growth and transformation during Nordic Capital’s ownership to become a world leading capital markets technology and infrastructure provider,” said Fredrik Näslund, partner at Nordic Capital Advisers. “We are immensely proud of the Itiviti team and it’s now time for them to take the next step with Broadridge, who is the ideal company to help capitalise on its next-generation technology platform and achieve even further growth and expansion.”
The acquisition is subject to customary closing conditions and regulatory approval and is expected to close in the fourth quarter of Fiscal Year 2021.