As a part of the deal agreement, General Atlantic will be taking 19 per cent stake in the new company for $715 million, Deutsche Börse will own 78 per cent and rest 3 per cent will be held by Axioma management for reinvesting around $105 million.
The US-based Axioma will be merged with Deutsche Börse’s index businesses, Stoxx, and Dax in a new company with a total valuation of EUR 2.6 billion and will be led by Axioma current CEO Sebastian Ceria.
The exchange in its statement said that Axioma will be a good fit with its index business and the combined entity will help in creating a buy-side intelligence player and is expected to create an annualised pre-tax run-rate synergies of around EUR 30 million by the end of FY 2021.
Deutsche Börse’s Stoxx business generated around €144 million in sales in 2018 and EBITDA of €100 million.
Axioma in its statement said that it is uniquely equipped to address the emerging trends that are reshaping the investment management, including a shift to passive, demand for smart beta and transition towards index customisation using technology.
Axioma was founded in 1998 and provides a multi-asset class portfolio and risk management software. It claims to have more than 400 assets managers, sell-side participants and hedge funds as customers. In 2018, the company generated $100 million in revenue and had 240 employees under its roll.
Sebastian Ceria commented:
“The combination of Stoxx’s indexing expertise with Axioma’s best-of-breed analytical capabilities in risk management, portfolio construction and performance attribution is expected to result in strong near-term revenue synergies and creation of a platform for future growth.”
The deal is expected to be close in the third quarter of 2019 and is subject to different market regulators.