TMX Group Secures VettaFi with $1.15 Billion

TMX Group Limited, the Toronto Stock Exchange owner, has disclosed its intention to fully acquire VettaFi Holdings LLC, securing the remaining 78% stake for USD $1.15 billion (CAD $1.4 billion). Coupled with TMX's initial 22% investment in VettaFi earlier this year, the acquisition sums up to a total value of USD $1.03 billion (CAD $1.40 billion).

VettaFi, a US-based firm specializing in indexing, analytics, digital distribution, and data services for ETFs and asset management, will significantly bolster TMX Group's strategy to expand revenue streams and enhance its data-driven product suite.

The acquisition values VettaFi at 15.4 times the expected 2024 adjusted EBITDA, emphasizing over 80% of its revenue as recurring. TMX anticipates the deal to positively impact adjusted EPS within the first year, funding the acquisition primarily through USD $1 billion in committed bank debt, scheduled to conclude in January 2024.

TMX Group's CEO, John McKenzie, expressed enthusiasm about the union, affirming that the collaboration throughout the year has solidified TMX and VettaFi as a formidable and harmonious partnership, further highlighting that the addition of VettaFi amplifies their ability to deliver data-driven insights of profound value to their clientele.

Following the transaction's closure, VettaFi is set to integrate into TMX Group's Global Solutions, Insights & Analytics division. Leland Clemons, VettaFi's CEO, expressed optimism, emphasizing that this transition marks an exciting phase for VettaFi's clients, partners, and employees. He mentioned that collectively, they aim to elevate market functionalities and foster mutual growth.

The pending acquisition is set to conclude in January 2024, pending the fulfillment of customary closing conditions. Ultimately, this strategic move aims to fortify TMX Group's offerings to ETF providers, positioning Canada more competitively in the global ETF industry.

This latest acquisition follows TMX Group's prior investment in a similar US-based company. In February 2023, the Canadian exchange operator announced its minority stake acquisition in ETFLogic, a fintech enterprise specializing in analytics and portfolio tools for investment fund manufacturers.

TMX Group Limited also recently unveiled its trading statistics for November 2023, encompassing the performance across its various marketplaces, including the Toronto Stock Exchange.

In November, TMX Equities Marketplaces witnessed a total volume of 10.3 billion contracts, slightly up from October's 9.4 billion but lower than November 2022's 12.6 billion. The total traded value stood at $212 billion, showing growth from Octobers $199 billion.

The third quarter of 2023 showcased noteworthy growth and resilience for TMX Group Limited in the financial landscape. Reporting a revenue increase to $287.3 million, up 8% from Q3 2022s $266.8 million, the Group reflected this growth in diluted earnings per share, rising to $0.31, a 7% increase from the prior year.

CEO John McKenzie emphasized TMX's enduring success in the first nine months of 2023, citing higher revenue propelled by double-digit growth from Global Solutions, Insights and Analytics, Trayport, TMX Datalinx, and increased revenue from Derivatives Trading and Clearing, excluding BOX. This success highlights TMX's strategy of diversification as a key driver for sustained growth.