Finastra, the fintech backed by Vista Equity Partners, has put its capital markets business up for sale, four people familiar with the process said.
Credit Suisse is advising on the process, the people said. Finastra’s capital markets unit provides technology that seeks to improve trading, as well as monitoring and compliance, for its clients, which include large banks.
Finastra’s capital markets unit produces $300 million in revenue, one of the people said. Recent deals in the space have sold for 10 to 15 times revenue. For example, Thoma Bravo bought Calypso Technology, which provides software that supports trading, risk management, collateral, processing, accounting, and compliance, for $3.75 billion or 15 times revenue in March. Broadridge Financial Solutions picked up Itiviti Holding, which supplies trading and connectivity technology to the capital markets industry, for about $2.5 billio n—or nearly 10 times—that month.
At 10 to 15 times, Finastra’s capital markets business could fetch anywhere from $3 billion to $4.5 billion.
“We don’t comment on market speculation,” a Finastra spokesman said. Credit Suisse declined to comment, and a Vista spokesman declined to comment.
The sales process comes nearly two years after Vista Equity tried to unload a stake in Finastra. In October 2019, Vista tried to sell as much as 50% of Finastra, valuing the fintech at $10 billion, according to reports. Vista Equity reportedly postponed the Finastra sale in April 2020, during the height of the Covid-19 pandemic, Forbes reported .
Finastra was created when Vista Equity, the software-focused private-equity firm from Robert Smith, acquired DH Corp in 2017 and merged it with portfolio company Misys. Finastra, of London, provides services such as mortgage lending, payments, and retail banking for many of the world’s leading banks.
The sale of Finastra’s capital markets business would be one of the first from a recently created fintech conglomerate. In the past few years, a wave of consolidation has hit the financial services space. In 2019, Fidelity National Information Services (FIS) bought WorldPay for $34 billion , while Fiserv (FISV) scooped up First Data for $22 billion. Global Payments (GPN) also bought TSYS for $21.5 billion that year. More recently, the Intercontinental Exchange acquired Ellie Mae for $11 billion in 2020, while S&P Global (SPGI) expects to close its $44 billion buy of IHS Markit in the second half of this year. The London Stock Exchange finally completed its $27 billion purchase of Refinitiv in January.
Private-equity firms and bankers had expected the surge of mergers & acquisitions to result in divestitures, but such deals have been slow to appear. S&P, after speaking to regulators, said in May that it was looking to sell IHS Markit ’s oil price information services business, as well as IHS’s coal, metals, and mining group.
One divestiture came when Motive Partners, a fintech-focused PE firm, acquired a majority of Fiserv’s investment services business in 2020 and renamed it Tegra118. In February, Motive teamed up with Clearlake Capital, which also invests in fintech, to buy InvestCloud in February. They merged it with Tegra118, and Finantix, another Motive company, to create a cloud-based wealth platform .
“We’re finally starting to see pullouts for some of the bigger financial conglomerates,” one banker said.
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