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Broadridge Financial Solutions to buy Itiviti from Nordic Capital for $2.5bn

Broadridge Financial Solutions has agreed to acquire Itiviti from Nordic Capital for about $2.5 billion.

Broadridge Financial Solutions has agreed to acquire Itiviti from Nordic Capital for about $2.5 billion. Houlihan Lokey Inc. and J.P. Morgan Securities LLC served as financial advisors to Broadridge on this transaction while Credit Suisse and Morgan Stanley acted as joint financial advisors to Nordic Capital on this transaction. Itiviti is a provider of of trading and connectivity technology to the capital markets industry.

PRESS RELEASE

NEW YORK, March 29, 2021 /PRNewswire/ — Significantly strengthening its capital markets capabilities and enhancing its position as a global Fintech leader, Broadridge Financial Solutions, Inc. (NYSE:BR), today announced it has signed a definitive agreement to acquire Itiviti Holding AB (“Itiviti”), a leading provider of trading and connectivity technology to the capital markets industry, in an all-cash transaction valued at €2.143 billion (approximately $2.5 billion) from Nordic Capital.

“The acquisition of Itiviti enhances Broadridge’s position as a global Fintech leader,” said Tim Gokey, Broadridge’s Chief Executive Officer. “By extending our capabilities into the front office and deepening our multi-asset class solutions, Itiviti significantly strengthens our Capital Markets franchise and better enables Broadridge to help financial institutions adapt to a rapidly evolving marketplace. Itiviti’s well-developed footprint in APAC and EMEA will increase our scale outside North America and strengthen our ability to serve our global clients.

“The acquisition is also expected to deliver value to our shareholders in the form of stronger recurring revenue growth, higher margins and higher Adjusted EPS. This incremental revenue and earnings growth positions us well to deliver at the higher end of our three-year growth objectives for recurring revenue and Adjusted EPS growth,” Mr. Gokey added.

Itiviti is a leading global capital markets technology service provider offering highly scalable solutions that financial institutions use to consolidate their trading infrastructure, driving significant cost savings. With offices in 16 countries, Itiviti serves 24 of the top 25 global investment banks and over 2,000 leading brokers, trading firms and asset managers across 50 countries. Itiviti’s suite of Trading and Connect solutions offer comprehensive tools to support both connectivity and adaptivity to changing market dynamics and regulatory demands. The solutions and services offered provide financial institutions the flexibility and functionality to serve any trading style across asset classes.

Itiviti CEO Rob Mackay stated, “Joining Broadridge represents an exciting next chapter for our business and team by creating a leading front-to-back capital markets technology and operations provider. The combination of our technology, solutions and people will unlock significant value for our clients and drive long-term growth for our combined business.”

With a focus on front-office trade order and execution management systems, FIX connectivity and network offerings, Itiviti is highly complementary to Broadridge’s industry-leading post-trade product suite and other capital markets capabilities. This combination is expected to drive significant value to clients by enabling them to streamline their front-to-back technology stacks, increasing efficiencies, reducing risk and optimizing balance sheet utilization across equities, fixed income, exchange-traded derivatives, and other asset classes. With more than $900 million in combined calendar 2020 revenues, Broadridge’s Capital Markets franchise will be even better positioned to help its clients adapt to increasing electronification and algo-driven trading and to mutualize non-differentiating functions to reduce their total cost of ownership.

In addition, Itiviti’s strong presence in APAC and EMEA will significantly expand Broadridge’s revenues outside of North America and enhance Broadridge’s international footprint in key markets. Itiviti’s blue-chip client base should also provide significant cross-sell opportunities across Broadridge’s product portfolio, further enhancing its long-term growth.

Itiviti generated recurring revenues of approximately €210 million in calendar year 2020. Its subscription-like revenue model delivers growing and high-quality recurring revenues. Upon closing, Itiviti will become part of Broadridge’s Global Technology and Operations segment and its senior management team, led by CEO Rob Mackay, will remain with the company to drive future growth.

“Itiviti has experienced a journey of growth and transformation during Nordic Capital’s ownership to become a world leading capital markets technology and infrastructure provider,” said Fredrik Näslund, partner at Nordic Capital Advisers. “We are immensely proud of the Itiviti team and it’s now time for them to take the next step with Broadridge, who is the ideal company to help capitalize on its next-generation technology platform and achieve even further growth and expansion.”

The acquisition is subject to customary closing conditions and regulatory approval and is expected to close in the fourth quarter of Fiscal Year 2021.

Broadridge Positioned to Achieve Higher End of Three-Year Growth Objectives
Broadridge is financing the acquisition through a new $2.55 billion term credit agreement. Following the closing, Broadridge expects to maintain an investment grade credit rating and intends to reduce its leverage over the next two years. The Company plans to continue to follow its historical capital allocation priorities, including internal investments, funding a growing dividend, and pursuing additional tuck-in M&A.

The acquisition of Itiviti is expected to be accretive to Adjusted EPS in the first full year after closing and generate attractive financial returns for Broadridge’s shareholders. In addition, the acquisition is expected to contribute 2.5-3 points to Broadridge’s recurring revenue compound annual growth rate (“CAGR”) and 2 points to its Adjusted EPS CAGR over the fiscal year 2020-2023 time period.

As a result, the Company believes it is well-positioned to achieve the higher end of the three-year 7-9% recurring revenue growth and 8-12% Adjusted EPS growth CAGRs that it presented at its December 2020 Investor Day.

Advisors
Houlihan Lokey Inc. and J.P. Morgan Securities LLC acted as financial advisors to Broadridge on this transaction. In addition, Squire Patton Boggs, Roschier Advokatbyrå, and Covington & Burling provided legal advice to Broadridge on the acquisition, and Cahill Gordon & Reindel LLP provided legal advice to Broadridge on the financing transaction.
Credit Suisse and Morgan Stanley acted as joint financial advisors to Nordic Capital on this transaction.

About Broadridge
Broadridge Financial Solutions (NYSE: BR), a global Fintech leader with over $4.5 billion in revenues, provides the critical infrastructure that powers investing, corporate governance and communications to enable better financial lives. We deliver technology-driven solutions to banks, broker-dealers, asset and wealth managers and public companies. Broadridge’s infrastructure serves as a global communications hub enabling corporate governance by linking thousands of public companies and mutual funds to tens of millions of individual and institutional investors around the world. In addition, Broadridge’s technology and operations platforms underpin the daily trading of on average more than U.S. $10 trillion of equities, fixed income and other securities globally. A certified Great Place to Work®, Broadridge is a part of the S&P 500® Index, employing over 12,000 associates in 17 countries. For more information about us and what we can do for you, please visit broadridge.com.

About Itiviti
Itiviti is a leading global capital markets technology service provider offering highly scalable solutions that deliver significant cost savings for financial institutions by enabling them to consolidate their trading infrastructure. The company’s modular OEMS (order execution management systems) support multi-asset class, global trading across both principal and agency trading operations. Itiviti’s Connect and Trade solution portfolios offer comprehensive tools to support both connectivity, reflective of the growing importance of FIX as the financial markets’ universal language, and adaptivity to changing market dynamics and regulatory demands. Headquartered in Stockholm, Sweden, with offices in 16 countries, the company serves over 2,000 customers across 50 countries, including several top-tier banks, brokers, trading firms and asset managers. For more information please visit itiviti.com.

About Nordic Capital
Nordic Capital is a leading private equity investor with a resolute commitment to creating stronger, sustainable businesses through operational improvement and transformative growth. Nordic Capital focuses on selected regions and sectors where it has deep experience and a long history. Focus sectors are Healthcare, Technology & Payments, Financial Services, and selectively, Industrial & Business Services. Key regions are Europe and globally for Healthcare and Technology & Payments investments. Since inception in 1989, Nordic Capital has invested more than EUR 17 billion in close to 120 investments. The most recent fund is Nordic Capital Fund X with EUR 6.1 billion in committed capital, principally provided by international institutional investors such as pension funds. Nordic Capital Advisors have local offices in Sweden, Denmark, Finland, Norway, Germany, the UK and the US. For further information about Nordic Capital, please visit www.nordiccapital.com.