TMX Group Limited to acquire a 78% stake in VettaFi Holdings for $1.15 billion

Ali Raza
Last Updated:

Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.

TMX Group Limited recently announced its intention to acquire the remaining 78% stake in VettaFi Holdings LLC. The owner of the Toronto Stock Exchange said that it will acquire the remaining stake for $1.15 billion (CAD $1.4 billion).

TMX previously acquired a 22% stake in VettaFi earlier this year — a move that it described as a strategic investment. At the time, the total value of the acquisition was $1.03 billion, or CAD $1.40 billion.

VattaFi is a company based in the United States which focuses on providing analytics, digital distribution, indexing, and other data-related services. It targets ETFs and the asset management industry.

Based on the firm’s release, the acquisition of the remaining stake will speed up TMX Group’s strategy to expand recurring revenue sources, as well as its data-driven product capabilities.

Acquisition details and plans for the future

The purchase price has valued VettaFi at 15.4x the expected 2024 adjusted EITDA, with more than 80 percent recurring revenue. Furthermore, TMX has shared that it expects the deal to be accretive to adjusted EPS by the end of the first year post-purchase.

The company will finance the acquisition through $1 billion in committed bank debt. The acquisition itself is expected to close next month, in January 2024. TMX Group’s CEO, John McKenzie, stated that the experience of working with VettaFi this year has confirmed that the two firms collaborating side by side are indeed a powerful combination, as well as a tremendous culture fit.

He added that, in the future, the addition of VettaFi will increase the value and depth of data-driven insights that TMX provides to its clients.

Moving forward, VettaFi will act within TMX Group’s Global Solutions, Insights & Analytics division, which will start after the transaction is closed. VettaFi’s CEO, Leland Clemons, commented on the move as well, stating that he is excited for his firm’s clients, employees, as well as partners, as they all collectively begin this next chapter. He added that together, they can make markets and each other better.

TMX sees multiple victories in 2023

For TMX, the move marks another investment in a similar US-based firm over the past year. Earlier this year, in February, the owner and operator of the Canadian exchange revealed its acquisition of a minority stake in ETFLogic. This is a fintech firm that provides analytics and portfolio tools for investment fund manufacturers.

More recently, the compny revealed its trading statistics for November of this year, including activities in a variety of marketplaces that fall under its umbrella, such as the Toronto Stock Exchange itself.

The report shows that TMX Equities marketplaces saw a total of 10.3 billion contracts, which is a noticeable increase from 9.4 billion seen in October. However, it also represents a notable drop from 12.6 billion seen in November 2022. Even so, the total value of trades surged to $212 billion — significantly higher than the $199 billion seen in October of this year.

The Group also saw its Q3 revenue hit $287.3 million, which is 8% higher compared to the same period last year.

About Ali Raza PRO INVESTOR

Ali is a professional journalist with experience in Web3 journalism and marketing. Ali holds a Master's degree in Finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of leading cryptocurrency publications including Capital.com, CryptoSlate, Securities.io, Invezz.com, Business2Community, BeinCrypto, and more.