WatersTech Spotlight: Fintech M&A

Undoubtedly, some the biggest stories of this year have been related to the surge in mergers and acquisition (M&A) activity in the fintech space. From Blackstone and its consortium of partners kicking off the New Year with a bang by acquiring Thomson Reuters’ financial and risk divisions, through to the saga that led to Ion Investment Group making an eleventh-hour play to snatch Fidessa from Temenos’ grasp, these past three months have had a significant impact on the shape of the vendor landscape.

Part of this is due to the cyclical nature of expansion and contraction within vendor circles that usually accompanies significant market events, such as the aftermath of the financial crisis and the subsequent period of rule-making that followed. But a more notable trend might be emerging, where a nimble and well-funded fintech startup sector and an established ‘bigtech’ community are exerting opposing forces on the middle ground.

WatersTechnology has covered these deals, but we’ve also analyzed the potential impact they will have on the sector and these firms’ competitors through news stories, charts, opinion columns and the Waters Wavelength Podcast. Find out what the strategy of major technology providers is going to be moving forward, with large vendors stockpiling cash and mid-weight firms looking nervously—or perhaps, hungrily—over their shoulders at potential suitors. A selection of our articles on this topic is below, with a number made available for free that were previously behind our paywall.

SS&C Flirts with Further Acquisitions after Fidessa

What’s the story about? SS&C Technologies, a firm that has grown significantly through M&A, makes no bones about the fact that it has its sights on potential acquisitions after its failed attempt to lure Fidessa to its stable.    

Why is it important? There has been speculation that SS&C would look to consolidate in the wake of its failed Fidessa bid, but the firm’s CEO, Bill Stone, has quashed those rumors, signaling the firm’s continued acquisitive intent.

Listen: The WatersTechnology team discusses SS&C’s plans on the Waters Wavelength Podcast.

Thomson Reuters, Blackstone Agree $20B Financial & Risk Unit Spin-Off

What’s the story about? Blackstone led a consortium that kicked the year off with a bang when it announced that it would be buying Thomson Reuters’ storied Financial & Risk business.

Why is it important? Not only did it illustrate the scale of the deals in play at the moment in the fintech space, but the combination of Thomson Reuters’ fintech firepower with other acquisitions or properties could create a new titan in the technology space.

Listen: Max Bowie, managing editor of WatersTechnology, joins the news team on the podcast to give his thoughts on what the deal means.

NEX CEO Sees Opportunity for Opportunities after CME Deal

What’s the story about? NEX had long been rumored to be on the block, despite its relatively young age—the company was formed from the remnants of Icap after its partial acquisition by Tullett Prebon—but the CME was a wildcard acquisitor that few saw coming. Here, NEX CEO Michael Spencer also says its venture arm will remain after its acquisition.

Why is it important? The combination of NEX and CME will create a dominant force in US Treasurys, and the potential synergies between NEX’s post-trade businesses and CME’s clearing and settlement functions are immense. It could be a game-changer for the US markets, but it also anchors CME in the UK ahead of Brexit.

Listen: WatersTechnology’ New York newsroom discusses the implications of the CME-NEX tie-up on the podcast.

Fintech Fever Grips M&A with Fidessa Acquisition Offer

What’s the story about? Temenos made a play for Fidessa in the early months of 2018. While it would end up losing out to Ion Investment Group, much of the structure, of the original deal remained in place, meaning many of our team’s original observations will likely still hold.

Why is it important? If the Thomson Reuters-Blackstone deal highlighted how important M&A would be in the US, this also kicked off a spate of deals on the other side of the Atlantic, and started one of the more complicated series of events in fintech acquisitions to date. It also set the tone of the year’s deal-making moving forward, with middleweight vendors beginning to find themselves attracting suitors.

Listen: Victor Anderson, editor-in-chief of WatersTechnology, joins the podcast to reminisce about Fidessa’s history in the markets—with more than a few entertaining stories.

S&P Global Makes $550 Million Bet on AI with Kensho Buy

What’s the story about? In terms of unexpected acquisitions, this has topped the list so far for 2018. The Goldman Sachs-backed analytics startup, Kensho, apparently found a home it can live with in S&P Global, which plans to use its artificial intelligence nous extensively in the future.

Why is it important? In a year that has been marked largely by megadeals, this shows that the startup sector is also reaching a phase of maturity where established players such as S&P Global feel comfortable making substantial investments in emerging technologies, such as AI.

Listen: The Waters team discusses the Kensho acquisition, and how fintechs are being more disruptive than ever—just in ways that weren’t exactly predicted.