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Talking Intelligent Trading with Andrew Delaney: A Glimpse into the Mysterious World of ION Trading

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Financial Technology Partners’ announcement this month of its client Carlyle Group’s recent $400 million acquisition of a ‘minority stake’ in ION Investment Group offered an interesting glimpse into the capabilities of the secretive Irish trading technology specialist.

The FTP announcement, issued on June 3, quoted Cam Dyer, managing director of Carlyle’s Global Technology, Media and Telecom (TMT) group, describing ION as “a global leader in financial technology with over €300 million in EBITDA, which is uniquely positioned to drive consolidation and innovation in the sector.” Dyer and Carlyle’s Renee James will join ION’s board as part of the transaction.

The deal – announced by Carlyle May 31 – was financed primarily from Carlyle Partners VI, a $13 billion fund that’s part of the company’s Corporate Private Equity segment, which itself has some $61 billion of assets under management.

The FTP document included a potted history of ION, which has historically shunned publicity. Founded in 1999 and headed by CEO Andrea Pignataro, ION has built on its original ION Trading business to offer a full suite of trading, risk management and treasury management solutions. Within the trading segment, the company offers interfaces to multiple markets across multiple asset classes, automated trading and market making tools, STP, auto negotiation and flow analysis. It also offers pricing engines, position keeping, trade entry, risk management and P&L calculation capabilities.

Interestingly, FTP provided a list of ‘selected’ ION acquisitions that have added to this functionality set. These included:

  • Triple Point, a provider of commodity trading and risk management solutions acquired in July 2013 for $900 million.
  • FFastfFill, acquired for $165 million in February 2013 and described as an SaaS provider to the global derivatives community (an ISV to you and I).
  • Financial Software Systems (FSS), a financial risk management software and consulting firm that was acquired in January 2013, for an undisclosed price.
  • Patsystems, a provider of trading and exchange systems to the derivatives community (another ISV), bought in November 2011 for $32 million.
  • Wall Street Systems, a provider of FX trade processing and treasury solutions acquired in April 2011, again terms not disclosed.

ION has made other acquisitions in this space not listed in the FTP document. These included: Iris Trading Systems, an Irish bond market trading system acquired a decade ago for an undisclosed amount, and more recently Caplin Systems, a provider of single dealer portal platforms acquired last year, once again for an undisclosed sum.

For FTP, the ION/Carlyle deal is the latest in a run of high-profile trading technology and financial data transactions, including:

  • The sale of TheMarkets.com to Standard & Poor’s Capital IQ for $300 million.
  • QuantHouse’s growth financing with ViewPoint Capital Partners.
  • Wombat Financial Software’s $225 million sale to NYSE Euronext.
  • ITG’s $230 million acquisition of Macgregor.
  • TradingScreen’s $110 million recapitalisation.
  • Chi-X’s sale of a minority stake to a group including Bank of America Merrill Lynch, Getco, Goldman Sachs, Morgan Stanley and others.
  • Instinet’s sale of its stake in Chi-X Europe to BATS for $305 million.
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