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Deutsche Börse to Acquire Portfolio and Risk Management Software Firm Axioma for USD 850m
Monday 15 April 2019

15 April 2019 - German stock market operator Deutsche Börse AG has agreed to acquire cloud-based portfolio and risk management software solutions provider Axioma, Inc. for USD 850m cash and debt free (around USD 820m equity value), the companies said.

The will be combined with Deutsche Börse's index businesses (STOXX and DAX) valued at EUR 2.6bn.

The combination will create a fully integrated, buy-side intelligence player that will provide unique products and analytics to meet the growing demand for an end-to-end platform.

Axioma, a global provider of cloud-based portfolio and risk management software solutions, and Deutsche Börse's index business are complementary and together will offer a broad suite of index and analytics products with global coverage.

As a result, the combined company is expected to materially grow revenue and EBITDA, and is expected to achieve annualised pre-tax run-rate synergies of around EUR 30m by the end of 2021.

As part of the transaction, Deutsche Börse has entered into a strategic partnership with General Atlantic, a global growth equity investor. General Atlantic will invest around USD 715m into the new company, which will be used to finance the acquisition of Axioma.

Founded in 1998, Axioma is a global provider of multi-asset class portfolio and risk management software solutions.

The company delivers proprietary solutions and data services offerings to over 400 leading asset managers, asset owners, sell-side participants and hedge funds.

Axioma generated approximately USD 100m in annual contract value revenue in 2018 and has grown ACV at a 23% CAGR since 2010. Axioma is currently investing its entire cash flow in further growing the business.

The transition to axiomaBlue, Axioma's cloud-based infrastructure platform, other new product offerings and strategic expansion are expected to drive ACV growth in line with historical experience.

Deutsche Börse's index business is the #4 global index player (based on last twelve months 2018 September revenue) and home of the #1 European tradable index, the EURO STOXX 50 (based on the notional value of traded derivatives contracts in 2018).

The index business on a stand-alone basis generated EUR 168m in gross revenues and EUR 115m in EBITDA in 2018 and has grown at double-digit rates over the past five years.

Deutsche Börse and Axioma have had an existing partnership since 2011 and have jointly developed innovative products, including factor indices and ETF products.

All Deutsche Börse businesses will benefit from direct access to the buy-side and the enhanced analytics platform.

Management anticipated that the combined company will be uniquely equipped to address trends that are reshaping investment management, including the shift to passive, the demand for smart beta and the transition towards index customisation using technology.

The combination will provide Axioma's current clients with closer integration to data from a leading family of indices, which are critical components for designing investment strategies.

Additionally, Deutsche Börse's index business clients will benefit from access to Axioma's powerful analytics that allow for creation and testing of custom indices.

The combined company will be led by current Axioma CEO Sebastian Ceria. He will seek to preserve the strengths of both Axioma and the Index Business and accelerate the entrepreneurial spirit.

A number of the Axioma management team, as current owners, will reinvest around USD 105m of their sales proceeds into the combined company alongside General Atlantic.

As a result, and depending on the roll-over, Deutsche Börse is expected to own approximately 78% of the new company, General Atlantic around 19%, and the Axioma management about 3%.

The transaction is subject to approval by the relevant competition authorities and further customary conditions and is expected to close in 3Q19.

Deutsche Börse Group is one of the largest exchange organizations worldwide. It organizes markets characterised by integrity, transparency and safety for investors who invest capital and for companies that raise capital markets on which professional traders buy and sell equities, derivatives and other financial instruments according to clear rules and under strict supervision.

Deutsche Börse Group, with its services and systems, ensures the functioning of these markets and a level playing field for all participants worldwide.

Axioma provides an integrated suite of front-to-back investment management solutions to a global client base, including asset managers, hedge funds, insurance companies, pension funds, wealth managers and investment banks.

Its services are comprised of multi-asset enterprise risk management, portfolio construction, performance attribution, regulatory reporting and custom index design.

General Atlantic is a global growth equity firm providing capital and strategic support for growth companies.

Established in 1980, General Atlantic combines a collaborative global approach, sector- specific expertise, a long-term investment horizon and a deep understanding of growth drivers to partner with great entrepreneurs and management teams to build exceptional businesses worldwide.

General Atlantic has more than 150 investment professionals based in New York, Amsterdam, Beijing, Greenwich, Hong Kong, Jakarta, London, Mexico City, Mumbai, Munich, Palo Alto, São Paulo, Shanghai, and Singapore.

Perella Weinberg Partners LP and Deutsche Bank AG served as financial advisors to Deutsche Börse. Hengeler Mueller and Cravath, Swaine and Moore LLP served as legal counsel to Deutsche Börse. Centerview Partners LLC and Sullivan and Cromwell LLP served as financial advisor and legal counsel to Axioma. Milbank served as legal counsel to General Atlantic.
Date Published: 15/04/2019
Target: Axioma
Country: USA
Deal Size: 850m (USD)
Sector: Computer Software
Type: LBO
Financing: Cash
Status: Agreed
Buyer: Deutsche B, örse AG
Buyer Advisor: Perella Weinberg Partners , Deutsche Bank , Hengeler Mueller , Cravath, Swaine and Moore