Broadridge is set to acquire Itiviti, a provider of trading and connectivity technology to the capital markets industry, in an all-cash transaction valued at €2.1 billion (approximately $2.5 billion) from Nordic Capital.
The move is set to strengthen Broadridge’s capital markets capabilities and enhance its position as a global fintech leader.
Itiviti’s focus on front-office trade order and execution management systems, FIX connectivity and network offerings, makes it complementary to Broadridge’s product suite and other capital markets capabilities.
The 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.
Broadridge says its Capital Markets franchise will now 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.
Itiviti’s footprint in Asia Pacific and Europe, the Middle East and Africa will increase Broadridge’s scale outside North America and strengthen its ability to serve global clients.
Additionally, Itiviti’s suite of ‘Trading’ and ‘Connect’ solutions offer comprehensive tools to support both connectivity and adaptivity to changing market dynamics and regulatory demands.
According to Broadridge’s CEO Tim Gokey, the acquisition is also expected to deliver value to shareholders in the form of stronger recurring revenue growth, higher margins and higher Adjusted Earnings Per Share (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,” says Gokey.
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.
Broadridge is financing the acquisition through a new $2.55 billion term credit agreement.
Following the closing, Broadridge expects to maintain an investment grade credit rating and intends to reduce its leverage over the next two years.
The company plans to continue to follow its historical capital allocation priorities, including internal investments, funding a growing dividend, and pursuing additional tuck-in mergers and acquisitions.
Itiviti CEO Rob Mackay comments: “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.”
Mackay adds: “The combination of our technology, solutions and people will unlock significant value for our clients and drive long-term growth for our combined business.”
The acquisition is subject to customary closing conditions and regulatory approval and is expected to close in the fourth quarter of Fiscal Year 2021.
Elsewhere, Broadridge Financial Solutions has expanded its European fund regulatory reporting solution with the integration of transaction cost calculation services from financial products, trading and market-making services provider Virtu Financial.
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