US-based private equity firm General Atlantic has acquired a 7.5% stake in bank owned pricing and valuations supplier Markit in return for a US$250 million investment in the company. The stake values the rapidly expanding data and post-trade services provider at around US$3.3 billion and has meant General Atlantic CEO Bill Ford has bagged a seat on the vendor’s board.
Ford is seemingly keen to jump on the business opportunity posed by data and post-trade services in the current environment, where firms are being compelled to spend their restricted budgets on systems to meet increased regulatory requirements. Markit has also demonstrated tremendous growth since it was founded nine years ago by a group of investment banks and has been fairly acquisitive during this time, including acquiring electronic trade confirmation network provider SwapsWire and trade reporting platform Boat, both in 2008.
However, Markit’s ownership structure has been subject to market speculation since the US Department of Justice investigation opened an investigation into its business practices last year, with observers wondering whether the probe may incite bank owners to distance themselves from the highly successful data vendor.
The General Atlantic investment will be used to assist Markit “actively in developing its growth strategy further and executing value creating acquisitions”.
The investment appears to dilute the holdings of the group of financial institutions that owns Markit, which is believed to include investment banks Bank of America, Citigroup, Credit Suisse, Deutsche Bank, Dresdner Kleinwort/Commerzbank, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Nomura, TD Securities, and UBS, as well as three buy side firms.
It isn’t clear whether the sale to General Atlantic signals an appetite for further divestment for the group. Another major bank-operated entity, the Turquoise multilateral trading facility, has sold a 60% stake to the London Stock Exchange in a sign that banks may be seeking to reduce their investments in non-core business.
For its part, Greenwich-based General Atlantic is a growth equity firm that combines a collaborative global approach with a long-term investment horizon. It manages approximately US$15 billion in capital and has more than 75 investment professionals based in Greenwich, New York, Palo Alto, London, Duesseldorf, Hong Kong, Beijing, Mumbai and Sao Paulo.