TMX Group Limited, the owner of the Toronto Stock Exchange, has announced that it will acquire the remaining 78% stake in VettaFi Holdings LLC for USD $1.15 billion (CAD $1.4 billion). Together with TMX's previous 22% strategic investment in VettaFi earlier this year, the total value of the acquisition is USD $1.03 billion (CAD $1.40 billion).
TMX Group Announces $1.4 Billion Acquisition of VettaFi
VettaFi is a US-based firm providing indexing, analytics, digital distribution and other data services to the ETFs and asset management industry. According to the release, the acquisition accelerates TMX Group's strategy to expand recurring revenue sources and its data-driven product capabilities.
The purchase price values VettaFi at 15.4 times the expected 2024 adjusted EBITDA, with over 80% recurring revenue. TMX expects the deal to be accretive to adjusted EPS within the first year. The acquisition will be financed through USD $1 billion in committed bank debt and is expected to close in January 2024.
"The experience of working together this year has confirmed that TMX and VettaFi are a powerful combination and a tremendous culture fit," said John McKenzie, the CEO of TMX Group. "Moving forward, the addition of VettaFi increases the depth and value of data-driven insights we provide to clients."
VettaFi will operate within TMX Group's Global Solutions, Insights & Analytics division following the closure of the transaction. "I am excited for VettaFi's clients, partners and employees as we begin this next chapter. Together, we will make markets and each other better,” Leland Clemons, the CEO of VettaFi, commented.
According to the press release, the acquisition of VettaFi by TMX Group is expected to close in January 2024, assuming the deal satisfies typical closing requirements. Ultimately, this is a strategic investment in strengthening TMX Group's offerings to ETF providers, positioning Canada more competitively in the global ETF industry.
Moreover, this marks another investment in a similar US-based company over the past year. In February 2023, the operator of the Canadian exchange announced the acquisition of a minority stake in ETFLogic, a fintech firm and provider of analytics and portfolio tools for investment fund manufacturers.
TMX’s November Volumes and Q3 Financial Results
TMX Group Limited recently disclosed its trading statistics for November 2023. This report encompasses the activities of various marketplaces under its umbrella, including the Toronto Stock Exchange.
Last month, TMX Equities Marketplaces registered a total volume of 10.3 billion contracts, marking a slight increase from October's contracts of 9.4 billion but a decrease from November 2022's contracts of 12.6 billion. The total value of trades reached $212 billion, showing a growth from October’s $199 billion.
In the financial landscape of the third quarter of 2023, TMX Group Limited demonstrated notable growth and resilience. The Group reported a revenue increase to $287.3 million, up 8% from Q3 2022’s $266.8 million. This revenue growth was reflected in the diluted earnings per share, which rose to $0.31, an increase of 7% from the previous year's $0.29.
“Higher overall revenue was driven by double-digit, year-over-year growth from Global Solutions, Insights and Analytics, including Trayport and TMX Datalinx, and increased revenue from Derivatives Trading and Clearing, excluding BOX,” John McKenzie, the CEO of TMX Group, commented on the first nine months of 2023, emphasizing TMX's enduring success through its strategy of diversification.
