Nasdaq to acquire risk management software provider Adenza in $10.5bn deal

In a landmark move, Nasdaq has signed an agreement to purchase Adenza, a provider of risk management and regulatory software in the financial services sector, for a whopping $10.5 billion, from Thoma Bravo.

The acquisition, financed in a mix of cash and common stock, fast-tracks Nasdaq’s strategic aspiration to become a global linchpin in the financial ecosystem.

The transaction, pending regulatory approvals, will involve $5.75 billion in cash and 85.6 million shares of Nasdaq common stock, valuing each share based on the volume-weighted average price over the 15 trading days preceding the signing.

The shares represent approximately 14.9% of Nasdaq’s outstanding shares and will be transferred to Thoma Bravo, the controlling entity of Adenza. Nasdaq plans to issue around $5.9 billion in debt to help fund the acquisition.

Upon successful completion, Holden Spaht, Managing Partner at Thoma Bravo, will join Nasdaq’s Board of Directors, which is to be expanded to twelve members.

Born out of the merger of Calypso and AxiomSL, Adenza has established itself as a robust, growth-oriented software entity serving capital market participants with end-to-end treasury, risk, and collateral management workflows and offering financial institutions regulatory and compliance software.

Commenting on Nasdaq acquisition of Adenza, Holden Spaht said: “When we combined AxiomSL and Calypso almost two years ago under Didier Bouillard‘s leadership, we had a vision to create a truly unique software franchise that could help financial institutions across the globe manage their most complex trading, risk, and regulatory reporting requirements.

“This acquisition is a clear validation of that strategy, and as part of Nasdaq, Adenza will be in a stronger position to build on its impressive momentum and serve an even larger global client base. Nasdaq has a long and impressive history of developing innovative solutions that have revolutionized the global capital markets, making them the perfect partner for this next phase of Adenza’s journey.

“We are excited to become a strategic shareholder in Nasdaq and bring our deep software and technology experience to help drive further innovation and digital transformation across the global financial system.”

Nasdaq gears up to amplify its financial ecosystem with $10.5bn acquisition of Adenza. Photo courtesy of Gabriele Giuseppini/Wikimedia Commons.

Nasdaq believes that Adenza’s addition will bolster its existing mission-critical solutions, widen its offerings across regulatory technology, compliance, and risk management, and solidify its standing as a comprehensive support system to financial institutions. The acquisition will enable Nasdaq to set up a full trade lifecycle platform with unmatched regulatory technology solutions.

Adena Friedman — Nasdaq Chair and CEO, commenting on Nasdaq acquisition of Adenza, said: “This is an exceptional opportunity to acquire a leading software company that enhances Nasdaq’s position at the heart of the global financial system.

“The acquisition of Adenza brings together two world-class franchises steeped in market infrastructure, regulatory, and risk management expertise at a time when financial institutions are navigating some of the most complex market dynamics in history.

“From fast-evolving global regulations to rapidly increasing pressures to modernize infrastructure, our clients are seeking trusted partners equipped to support them in this challenging environment. Nasdaq aspires to be that partner every day, and with Adenza we can offer an even broader range of mission-critical solutions that enhance the liquidity, transparency, and integrity of the world’s financial system.”

Adenza’s financial profile is equally enticing, with a forecasted revenue of approximately $590 million in 2023, along with an impressive organic revenue growth of 15%, annual recurring revenue growth of 18%, and an adjusted EBITDA margin of 58%.

Nasdaq expects that the Adenza acquisition will grow its Solutions Businesses revenue from the current 71% to 77% in 2023, increase its adjusted EBITDA margin to 57%, and add approximately $300 million of annual unlevered pre-tax cash flow.

Completion of the transaction, which is subject to regulatory approvals and customary closing conditions, is anticipated within the next six to nine months.