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Transactions

February 2012
New York, New York
has acquired a minority interest in
London, United Kingdom


Background

Fixnetix Ltd. is a fast-growing, privately held, venture-backed, London, UK-based company that had become a leader providing low-latency trading technology and infrastructure to hedge funds and other trading firms via 33 co-location and proximity hosting centers in Europe and the US.  The company was founded in 2006 by three partners: CEO Hugh Hughes, a former chief executive of SG Securities, a unit of French bank Société Générale SA; chief operating officer Paul Ellis, formerly of ABN Amro; and Alasdair Moore. In 2011, the Company was offering high speed access to more than 50 markets along with risk controls and many other trading services.  According to published sources, revenue at the group was about £25 million in 2011, up from about £1 million in 2008.

Marlin & Associates’ (“Marlin”) client NYSE Euronext offers access to a wide range of trading technologies and infrastructure around the globe, through its NYSE Technologies (“NYXT”) group.  The exchange has identified technology as a key area for revenue growth. 

In early 2011, Marlin & Associates identified Fixnetix (the “Company”) to NYXT as a highly interesting candidate that could accelerate NYXT’s ability to provide managed service capabilities to capital markets participants in Europe and other market centers worldwide, complementing NYXT’s ongoing deployment of Global Liquidity Centres.  After some preliminary discussion, Fixnetix indicated a willingness to discuss a wide range of potential strategic alternatives, including a sale of the entire company.   However, the shareholders including management and financial sponsors Thematic Capital Partners and Delta Partners felt no pressure to transact at all.

Beginning in the summer of 2011, Marlin and NYXT held series of meetings and conversations with the Company’s management and shareholders, and received detailed information on the Company’s financials, customers and products.  At the same time, NYSE was undergoing regulatory reviews in the US and Europe of its proposed merger with Deutsche Börse AG.



Overview

Throughout the second half of 2011, Marlin, NYSE and Fixnetix personnel maintained a dialog and reviewed strategic and financial options.  Finally, in late 2011, the parties mutually agreed that the best initial approach was for NYXT to make a strategic investment into Fixnetix rather than pursue an outright acquisition.  That approach would allow Fixnetix to continue operating as an independent entity, with strategic assistance, as appropriate, from NYXT.  At the same time, Marlin & Associates worked closely with NYXT to structure the investment to align the interests of all parties. 

On February 1st, 2012, The European Commission blocked the proposed merger between NYSE and Deutsche Börse.  Two weeks later, NYXT acquired about 25% of Fixnetix along with an option to acquire the remaining 75% of shares over time.   

The investment provides NYXT with a strong strategic partnership with a fast growing firm that has a blue chip client base of financial services firms and a team with deep experience in providing managed services to mission critical operations within these firms.  It furthers NYSE’s goal of building trading infrastructure hubs in key markets across the globe in order to provide local and foreign institutions with a wide range of services, including market access, hosting, market data and order routing technology.

The strategy also allows the NYSE to globalize elements of its franchise, without pursuing what have become increasingly high-risk, cross-border mergers with other exchanges.

M&A Role

Marlin & Associates identified Fixnetix as a candidate, assisted in conducting the due diligence reviews, coordinated negotiations (seeking and finding resolution for deal-related issues) and acted as exclusive strategic and financial advisor to NYSE Euronext for this transaction.

Press

NYSE Euronext Announces Acquisition of Strategic Shareholder Interest in Fixnetix

February 16, 2012

-Integrates with NYSE Technologies’ Complementary Expertise in Low-Latency Managed Trading Solutions-
-Extends Services Reach, Creates Customer Value & Strengthens the Capital Markets Community-

London and New York, 16 February 2012 – NYSE Euronext today announced an agreement to subscribe for shares in Fixnetix Limited, a leading service provider of ultra-low latency data provision, co-location, trading services and risk controls for more than 50 markets worldwide.  NYSE Euronext has commenced a tender offer to acquire approximately 25% of the outstanding shares in Fixnetix and is pleased to announce that more than 90% of Fixnetix's shareholders have already accepted the offer.  This agreement, which includes an option for NYSE Euronext to acquire the remainder of Fixnetix at any time over the next three years, complements key areas of NYSE Technologies’ diverse product portfolio to offer customers integrated multi-asset market access and managed services. 

The transaction positions NYSE Technologies’ extensive global reach and technology solutions alongside Fixnetix’s low latency market data and trading infrastructure services to present customers a unique combined offering of core managed services delivered to markets and market participants around the world.  Building on NYSE Technologies on-going deployment of Global Liquidity Centres that already include the U.S., Europe, Tokyo and Toronto, this strategic investment will allow both companies to offer their industry-leading trading and market information services to global customers with greater integration, scale and ease.

 “This strategic shareholder interest in Fixnetix aligns with our mission to build a global capital markets community supported by world-class technology, broad connectivity and diverse customer participation that yields greater liquidity and market innovation,” said Stanley Young, CEO of NYSE Technologies. “With our collective experience in delivering customer-driven technology solutions that facilitate global multi-asset trading, we will create an even more compelling value proposition for market participants trading anywhere in the world.”

Michael Geltzeiler, Group Executive Vice President and CFO of NYSE Euronext added, “Today’s announcement further demonstrates NYSE Euronext’s commitment to using our strong capital position to create immediate strategic value that delivers greater opportunities for the company, our diverse global customers and the broader marketplace.  Acquiring this strategic interest in Fixnetix allows us to better leverage our combined technology presence to reach more customers in more locations.”

“We at Fixnetix are thrilled with the investment from NYSE Euronext as this will enable us to expand our U.S. coverage and expand into Asia,” said Hugh Hughes, Chief Executive of Fixnetix.  “Fixnetix and NYSE Technologies share common philosophies of working with our customer base to increase efficiency and reduce costs.”

Although the companies will continue to operate independently, where appropriate NYSE Technologies and Fixnetix will work together to offer customers integrated market access to highly attractive liquidity venues in Europe, the Americas and Asia.  Clients can choose from a broader portfolio of targeted trading solutions delivered with a lower time to market as a single solution through the integration of the best-in-class technologies from these market leaders.  The investment enables both parties to streamline the process for designing and installing various elements of complex global trading infrastructures while maintaining the proven performance and reliability of NYSE Technologies and Fixnetix products alongside other third-party vendors.

About NYSE Technologies

A division of NYSE Euronext (NYX), NYSE Technologies provides broadly accessible, comprehensive connectivity and transaction capabilities, data and infrastructure services, and managed solutions for a range of customers requiring next-generation performance and expertise for mission critical and value-added trading services. NYSE Technologies offers a diverse array of products, services and solutions to: the Buy Side, including order routing, liquidity discovery and access to a community of over 630 Broker-Dealers and execution destinations globally; the Sell Side, including high performance, end-to-end messaging software and innovative market data products delivered on the world’s largest, most reliable financial transaction network; and Market Venues and Exchanges, including multi-asset exchange platform services, managed services and expert consultancy. With offices across the U.S., Europe, and Asia, NYSE Technologies offers advanced integrated solutions for the global capital markets community, earning the ability to power trading operations for many of the world’s best financial institutions and exchanges. For additional information visit: http://www.nyse.com/technologies

 About Fixnetix

Fixnetix, winner of the 2011 Deloitte Technology Fast50 UK, provides outsourced managed services across multiple asset classes to leading global banks, hedge funds and proprietary trading groups seeking ultra-low latency trading, market data, hosting, infrastructure connectivity and risk management solutions. The company is in 33 co-location and proximity hosting centres across Europe and the US and offers trading access to more than 50 markets.

Fixnetix is one of the first companies to offer an FPGA (Field Programmable Gate Array) trading solution when in late November 2010 it announced a real-time low latency filter, iX-eCute, an FPGA to solve the eternal industry conundrum of pre-trade risk, compliance and ultra-low latency execution. Unlike other solutions, the iX-eCute microchip has near zero impact on latency for governing the required checks directed by the recent SEC Rule 15c3-5 and anticipated declarations from other regulatory governing bodies by having nic to nic times as low as 740 nanoseconds. More information: http://www.fixnetix.com

 

Marlin & Associates acted as exclusive strategic and financial advisor to NYSE Euronext.

About Marlin & Associates

Marlin & Associates Holding LLC is a boutique investment banking and strategic advisory firm specializing in acquisitions and divestitures of U.S. and international middle-market firms that provide technology, digital information and healthcare-related products, technology and services. The firm is headquartered in New York, NY and has additional offices in Washington, DC; Toronto, Canada; and Hong Kong. Further information can be read at www.MarlinLLC.com.

Marlin & Associates Securities LLC, a wholly-owned subsidiary of Marlin & Associates Holding LLC, is a broker-dealer registered with the Securities and Exchange Commission and is a FINRA/SIPC member firm (www.finra.org). Investment banking and/or securities are offered through Marlin & Associates Securities LLC. Marlin & Associates' professionals have advised on more than 200 successfully completed transactions.

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