[ M A R K E T R E V I E W | M E R G E R S & A C Q U I S I T I O N S ]
the company, Ipreo displayed tremendous growth with revenues up 60 % and several new product launches, while also onboarding a raft of new buy-side clients and carrying out its global expansion strategies. For buy-side firms with data strategies at the top of their agendas for regulatory compliance, decision-making and performance optimisation, mergers such as this often provide an opportunity to re-evaluate their existing data set-ups and react accordingly. IHS Markit’ s acquisition of Ipreo officially closed in early August, and Ipreo’ s services are already being combined with IHS Markit’ s in a bid to immediately add value for clients for both firms.
At the same time the news landed about plans to buy Ipreo, IHS Markit quietly announced it is seeking a buyer for its endto-end OTC post-trade processing business, MarkitSERV. There has been no movement on this one, at the time of writing, but the business recently entered into a partnership which saw the derivatives reporting segment of the business connect to CME Group’ s trade repositories in Australia and Europe.
Best merger of equals: Itiviti & Ullink
The“ merger of equals” tagline was thrown about a lot last year during Deutsche Borse’ s wooing over the LSEG as part of its failed bid to create a German / British exchange behemoth. While this year hasn’ t thrown up a deal with quite the same proportions( yet), the phrase seems to have stuck in people’ s minds.
In a deal labelled a“ union of equals”, trading systems providers Itiviti and Ullink completed plans to merge in March, forming a $ 200 million Franco-Nordic technology powerhouse. The combined entity now boasts more than 1,000 employees and a local presence in all major markets across Europe, Asia and the Americas. Integration work of the two product sets began in earnest in April shortly after the deal was finalised. Echoing that of Fidessa and ION Investment Group’ s deal, the merger connects Ullink’ s buy-side equities and derivatives trading products and services with Itiviti’ s market making technology platforms that have predominantly focused on the sell-side.
Consolidation among trading technology vendors is an almost constant vein running through trading activity, as new and old firms alike are sized up and then devoured.
As Itiviti’ s chief executive, Torben Munch, pointed out at the time of the announcement, increasing regulatory pressures and changing market structure means market participants are now looking for full-service technology vendors that they can truly rely on.
While much of last year’ s M & A activity focused on vendors looking to bolster their back- and middle-office portfolios ahead of the introduction of MiFID II, the market has now turned its attention back to the sharp end of business and managed solutions, and deals of this nature may become a lot more common going forward.
Honourable mentions
High-frequency trading( HFT) continued to condense earlier this year following Hudson River’ s move to buy rival market maker Sun Trading. Terms of the deal were withheld, but it didn’ t come as much of a surprise to the industry, as high-speed trading firms continue to battle low market volatility, increasing costs and shrinking revenues. The trend continues from last year, when Virtu Financial was quick to snap up KCG last year in a deal estimated to be worth $ 1.4 billion as it looked to establish a HFT powerhouse.
Hot on the heels of State Street, SS & C Technologies confirmed plans to buy investment management software provider and Charles River rival, Eze Software, for a more conservative fee of $ 1.45 billion just one week later. Known for its penchant of hoovering up any business or product that takes its fancy, the acquisition of a well-regarded and widely-used OMS provider such as Eze should prove a salve to SS & C after its failed attempt to buy Fidessa earlier in the year. Another example of the shift among middle- and back-office service providers looking to gain front-office capabilities, particularly at a time when buy-siders are reviewing their OMS / EMS options.
54 // TheTrade // Autumn 2018