US investment firms Clearlake Capital Group and Motive Partners have agreed to acquire the BETA+ assets of the London Stock Exchange Group (LSEG) for total cash consideration of $1.1 billion before tax and separation costs.
The deal is expected to close in the second half of 2022, subject to regulatory approvals and other customary closing conditions.
BETA+ provides back-office processing solutions to the wealth management industry, including securities processing and tax reporting.
BETA+ assets include assets from BETA (securities processing, custody, clearing and asset management technology), Maxit (cost and tax basis reporting software) and Digital Investor (front-end client solutions).
In the fiscal year ended December 31, 2021, it had revenues of approximately $300 million, mostly related to US markets.
“BETA+ has established a strong position in the self-clearing technology space and the broader wealth management ecosystem with a reputation for serving the unique needs of global financial institutions and their clients,” said Behdad. Eghbali, co-founder and managing partner, and James Pade. , Partner of Clearlake.
LSEG expects to return a significant portion of the net proceeds to shareholders, via a buyout, while continuing to support organic and inorganic growth opportunities and maintaining our leverage ratio within the target range of 1 to 2x.
LSEG said in a statement that further details will be announced in due course and any takeovers are expected to begin in the third quarter.
The divestiture of BETA+ and the new strategic partnership reposition the growth profile of the Wealth segment of LSEG’s Data and Analytics business, which will now target mid-single-digit annual revenue growth over the medium term.
Andrea Remyn Stone, Group Head Data & Analytics, LSEG said: “The divestment of BETA+ will focus LSEG’s Wealth business on meeting the needs of our clients in high growth areas. This includes providing data, analytics and workflow tools where we have deep capabilities and where LSEG is driving innovation.
Additionally, LSEG has entered into a new long-term strategic partnership for data, content and tools with BETA+ and portfolio companies owned by Motive and Clearlake.
Sabrina Bailey, Global Head of Wealth, Data & Analytics, LSEG said, “We are delighted to establish a long-term strategic partnership with BETA+ as we reposition our Wealth business to focus on LSEG’s core strengths. We look forward to collaborating with Motive and Clearlake as we deliver this exciting opportunity in the growing wealth segment, providing large-scale access to new market channels for our business.
The wealth management industry continues to present opportunities, supported by tailwinds across the spectrum, including significant movement in technology modernization, industry consolidation, increased retail and the democratization of capital markets.
Over the past few years, the space has seen growth in various avenues, compounded by investments from new and established players.
This has presented investors and well-placed innovators with opportunities to digitize legacy technologies, expand product offerings to meet unmet demand, and create efficiencies across the value chain.
Founded in 2006, Clearlake Capital Group is an investment firm operating integrated businesses in private equity, credit and other related strategies.
Motive Partners is a private equity firm specializing in building, supporting and buying technology companies that enable financial economics.
By acquiring the BETA+ assets of LSEG and creating a stand-alone platform, Clearlake and Motive intend to execute a buy-and-build strategy, underpinned by wholly owned Clearlake OPS® and the Motive Value Creation Plan developed by Motive Create and the Industry Partner team.
This will include building critical platform infrastructure on the back-end of the Wealth workflow, with a plan to use proprietary expertise and know-how to augment the core technology of the BETA platform +, enhance the functionality of the existing blue chip client set, enter new and high-growth markets, and cultivate partnerships within the combined Wealth ecosystems.
Stephen C. Daffron, co-founder and industry partner of Motive Partners, said, “BETA+, along with our other portfolio companies, will focus on creating frictionless digital experiences for clients, advisors and staff across the home office with streamlined processes. , reduced costs, and increased retention and satisfaction, which ultimately makes it easier for Wealth clients to obtain solutions that meet their financial needs.