Broadridge acquires Itiviti to extend capital markets arm in $2.5bn deal

By Sunniva Kolostyak

Financial technology provider Broadridge has signed a definitive agreement to acquire trading and connectivity specialist Itiviti for €2.14 billion ($2.5 billion) in an all-cash transaction from Nordic Capital.

By absorbing Itiviti Holding AB, a capital markets provider which specialises in offering scalable solutions to consolidate trading infrastructure, Broadridge is expanding its services into the front office and strengthening multi-asset capabilities at a global scale, while meeting financial objectives.

It will also enable Broadridge to help financial institutions adapt to a rapidly evolving marketplace with multi-asset class solutions, utilising Itiviti’s footprint in APAC and EMEA to scale outside North America, and provide opportunities to cross-sell across product portfolios.

Tim Gokey, Broadridge’s Chief Executive Officer, commented: “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.”

Itiviti serves 24 of the top 25 global investment banks and over 2,000 leading brokers, trading firms and asset managers across 50 countries. Its suite of Trading and Connect solutions offer 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. It generated recurring revenues of approximately €210 million in calendar year 2020.

Also commenting on the acquisition, Itiviti CEO Rob Mackay stated: “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.”

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.

This combination of Itiviti’s front-office systems and Broadridge’s post-trade suite 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 $900 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.

The acquisition is subject to customary closing conditions and regulatory approval and is expected to close in the fourth quarter of Fiscal Year 2021. Houlihan Lokey Inc. and J.P. Morgan Securities LLC acted as financial advisors to Broadridge on this transaction. In addition, Squire Patton Boggs, Roschier Advokatbyrå, and Covington & Burling provided legal advice to Broadridge on the acquisition, and Cahill Gordon & Reindel LLP provided legal advice to Broadridge on the financing transaction. Credit Suisse and Morgan Stanley acted as joint financial advisors to Nordic Capital on this transaction.