As of September 1, 2021, we are pleased to be part of D.A. Davidson & Co. We will continue serving our clients as part of their full-service Investment Banking Group. Click here to learn more about our combined strengths.
×

Capital Markets Infrastructure: Unsexy – and Yet Hot. Our March 2018 Fintech Market Update

Mar 14, 2018

Capital Markets Infrastructure: Unsexy – and Yet Hot. Our March 2018 Fintech Market Update

Fintech, In the News, Market Update 0 Comments

Dear Clients and Friends,

Our latest Fintech m&a report can be found here. It highlights m&a trends and transactions in the seven segments of the Fintech world that we follow and sometimes lead. Please see our March Fintech report here.

Close followers of our Fintech newsletters will know that one of the Fintech sectors we follow closely is Capital Markets Infrastructure. It may not be a sexy segment. But, from an m&a perspective, it’s hot.

A few weeks ago, McKinsey came out with a 30-page report on the segment – titled: Fintech Decoded:  Capturing the opportunity in capital markets infrastructure. We like it.

McKinsey’s database includes about 700 capital markets infrastructure companies. (Our database has about 2,800 such firms.)  They note that the number has quadrupled since 2010 – we too show a ton of growth in the aggregate number of firms in the segment, the number of new firms, and the revenue they all generate. McKinsey opines that growth in this segment is likely to continue. We agree.

The McKinsey report discusses four ways in which Fintech companies are innovating: Providing Access to Capital, (including broadening the range of asset classes); Trade Execution; Post Trade Services; Data Analytics and Operations (lowering latency, reducing operational risk and improving efficiency). We like the four categories – and would add Pre-Trade Decision Support.

The report also discusses four technologies being used by leading edge firms including: Advanced Analytics, Distributed Ledger Technology; Cloud and Quantum Computing; and Automation. We like those technologies too – and would add innovative service models such as SaaS, PaaS, and IaaS.

McKinsey notes – and we agree – that while “…growth in Fintech investment across the broader financial services sector has slowed since 2015”, demand by investors and acquirers in the capital markets infrastructure segment has remained strong – and shows no signs of slowing. We love working with innovative companies in all seven segments of the Fintech world that we follow and sometimes lead. And while the Capital Markets Infrastructure segment may not be sexy, there is no question that it is hot!

As you will see in the report found here, m&a values in this space continue to rise. Some of the more interesting transactions this month include:

  • Temenos (SWX:TEMN) agreed to acquire Fidessa for $1.9bn, valuing the company at an implied 3.8x LTM revenue and 21.5x LTM EBITDA,
  • Visa (NYSE:V) agreed to acquire Fraedom for £142mm (~$196mm), valuing the company at an implied 4.3x LTM revenue,
  • CITIC Capital Partners (Hong Kong) and Caixin Global (Beijing, China) agreed to acquire Global Market Intelligence Division (“GMID”) from Euromoney Institutional Investor for $181mm, valuing the company at 12x LTM operating profit,
  • The Shenzhen Stock Exchange (Shenzhen, China) and The Shanghai Stock Exchange (Shanghai, China) agreed to acquire a 25% stake in Dhaka Stock Exchange for $119mm, implying an enterprise value of $477mm,
  • Pagaya Investments (Tel Aviv, Israel) raised $75mm in a debt funding round led by Citi.

Please see our March Fintech M&A Update here.

Ken Marlin

Ken Marlin

Ken Marlin is Managing Partner and Founder of Marlin & Associates and the author of "The Marine Corps Way to Win on Wall Street: 11 Key Principles from Battlefield to Boardroom" (St. Martin's Press 2016).

Over the course of more than 30 years Ken has advised scores of U.S. and international middle-market technology enabled firms on the best ways to buy, sell, grow and thrive. Along the way, he's been an entrepreneur (three times), a tech company CEO (twice), a senior corporate executive (twice) and an investment banker.

Seventeen years ago, Ken embarked on a journey to create a different sort of investment bank - one that would meld the investment banking skills he learned over 20 years on Wall Street with lessons he learned as a tech entrepreneur and the principles he learned during the decade he spent on active duty as a U.S. Marine Corps infantry officer. Today, Marlin & Associates is one of the most active M&A advisers in the information technology arena.

Institutional Investor Magazine has five times named Ken as one of II’s “Tech 50” and the II “FinTech 35” - both of which honor the most influential figures in the financial technology data and analytics sector.

Outside the office, Ken is a trustee of the Madison Square Boys and Girls Club, which serves underprivileged kids throughout the five counties of New York City; and an active supporter of the Phoenix House Foundation, The Wall Street Warriors Foundation, The Marine Corps Heritage Foundation, University of the People, the Hurricane Island Outward Bound School, and Outward Bound Peacekeeping.

Ken’s book has garnered strong reviews and is consistently ranked among the top in governance, finance and leadership. One reviewer called it a compelling vision to improve Wall Street by returning to solid core values like taking the long view, behaving with honor, delivering excellence and working for a cause greater than money.

Ken earned a BA from the University of California (Irvine), an MBA from UCLA, and a post-MBA Advanced Professional Certificate in Corporate Strategy from New York University. He lives in New York City with his wife, daughter, a dog, a cat and turtle.

Connect with Ken:
Back to Top