Tradeweb Markets to acquire Institutional Cash Distributors for $785m

Tradeweb Markets Inc. (Nasdaq: TW), a premier global operator of electronic marketplaces for various financial sectors, including rates, credit, equities, and money markets, announced its definitive agreement to acquire Institutional Cash Distributors, LLC (ICD), a leading technology provider for institutional investment and corporate treasury organizations. The deal, valued at $785 million, subject to standard adjustments, marks a significant expansion for Tradeweb into a new and rapidly growing client segment. This acquisition is notably poised to be funded entirely through cash on hand.

In acquiring ICD, Tradeweb not only broadens its existing client base but also enhances its technological offerings with ICD’s robust, proprietary solutions. ICD, established in 2003, has cemented its reputation by serving over 500 corporate treasury organizations, including around 17% of the S&P 100 as of the end of December 2023. These organizations span across 65 industries in more than 45 countries, relying on ICD for investing in money market funds and other short-term products to manage liquidity effectively. ICD’s extensive reach, marked by an average daily balance exceeding $230 billion in 2023, is a testament to its significant impact within the U.S. institutional money market fund portal landscape. Furthermore, ICD’s client retention rate stands at an impressive 99%, underpinned by an exceptional net promoter score.

ICD’s flagship offerings, the ICD Portal and ICD Portfolio Analytics, represent a comprehensive suite for researching, trading, analyzing, and reporting on investments. These tools, encompassing a wide range of investment providers, primarily focus on money market funds alongside access to other short-term products like deposits, fixed-term funds, and separately managed accounts (SMAs). The Portfolio Analytics feature, leveraging AI and cloud technologies, allows for a holistic aggregation and analysis of positions across a corporate treasury’s entire portfolio.

The integration of ICD into Tradeweb’s ecosystem is anticipated to unlock new avenues for strategic growth and cross-selling. Tradeweb aims to leverage ICD’s innovative solutions to offer a more comprehensive package to corporate treasurers and asset managers globally, focusing on optimizing short-term liquidity management, FX risk, yield, and duration. The acquisition promises not only to maintain ICD’s seamless integration capabilities with third-party treasury management and accounting systems but also to expand Tradeweb’s international presence and clientele.

Tradeweb CEO Billy Hult emphasized the strategic alignment between the two companies, highlighting the opportunity to diversify Tradeweb’s client and business mix while advancing into adjacent markets. The acquisition is seen as a pivotal step towards electrifying trading processes for corporate treasurers, promising enhanced efficiencies and service levels. ICD’s CEO Tory Hazard also expressed enthusiasm for the partnership, envisioning a future where integrated technology solutions deliver unparalleled value to clients.

The transaction, expected to close in the second half of 2024, is subject to customary closing conditions and regulatory reviews. It is projected to be accretive to Tradeweb’s adjusted earnings per share within the first 12 months post-closing, aligning with the company’s investment return objectives.

The acquisition has garnered advisory support from J.P. Morgan Securities LLC and Morgan Stanley & Co LLC for Tradeweb, with legal counsel from Fried, Frank, Harris, Shriver & Jacobson LLP. ICD, backed by Parthenon Capital Partners, received financial advisement from Raymond James and Moelis & Company LLC, with Kirkland & Ellis LLP providing legal guidance.