Toronto Exchange Owner Buys ETF Index Firm in Financial-Data Strategy

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(Bloomberg) — TMX Group Ltd., the owner of the Toronto Stock Exchange and other trading venues, agreed to buy an index provider to the exchange-traded fund industry, expanding deeper into financial data.

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TMX will pay $848 million to buy the 78% of VettaFi Holdings LLC that it doesn’t already own, financing the deal with bank debt, according to a statement late Wednesday.

New York-based VettaFi was formed last year from the union of several businesses, including S-Network Global Indexes and Alerian, two companies that develop indexes that can be used by ETF issuers to follow a variety of investment strategies. There’s $31 billion of assets linked to VettaFi indexes, according to the company’s website.

It also owns research tools and products such as an online ETF database and websites aimed at financial advisers.

For TMX Group, it’s a sizable deal that extends a strategy of selling an array of information and financial data in the pursuit of growth as traditional lines of business stall, such as cash equities trading. It’s a plan that bears some resemblance to the one followed by London Stock Exchange Group Plc.

TMX’s equities and fixed-income sales fell 1% in the first nine months of year, while derivatives revenue rose just 3%.

VettaFi will fit into the company’s global solutions, insights and analytics segment — now its largest, representing about a third of revenue. The implied valuation of the deal is about 15.4 next year’s adjusted earnings before interest, taxes, depreciation and amortization.

TMX bought 22% of VettaFi earlier this year. In total, it will have paid a little more than $1 billion for the whole business once the takeover closes, expected next month.

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