Axioma will be combined with Deutsche Börse’s index businesses (STOXX® and DAX®) valued at €2.6 billion to create a fully integrated, buy-side intelligence player that will provide products and analytics. Axioma and Deutsche Börse’s index business are highly complementary and together will offer a broad suite of index and analytics products with global coverage.
As a result, the combined company is expected to materially grow revenue and EBITDA, and is expected to achieve annualized pre-tax run-rate synergies of around €30 million by the end of 2021.
As part of the transaction, Deutsche Börse has entered into a strategic partnership with General Atlantic, a global growth equity investor.
General Atlantic will invest around US$715m into the new company, which will be used to finance the acquisition of Axioma.
Founded in 1998 by Sebastian Ceria, CEO, Axioma is a global provider of multi-asset class portfolio and risk management software solutions. The company delivers proprietary solutions and data services offerings to over 400 asset managers, hedge funds, insurance companies, pension funds, wealth managers and investment banks. Its services are comprised of multi-asset enterprise risk management, portfolio construction, performance attribution, regulatory reporting and custom index design.
Led by Theodor Weimer, CEO, Deutsche Börse Group is one of the largest exchange organizations worldwide. It organizes markets characterised by integrity, transparency and safety for investors who invest capital and for companies that raise capital – markets on which professional traders buy and sell equities, derivatives and other financial instruments. Deutsche Börse’s index business is the #4 global index player (based on last twelve months (LTM) 2018 September revenue) and home of the #1 European tradable index, the EURO STOXX 50® (based on the notional value of traded derivatives contracts in 2018). The index business on a stand-alone basis generated €168 million in gross revenues and €115 million in EBITDA in 2018 and has grown at double-digit rates over the past five years.
Deutsche Börse and Axioma have had an existing partnership since 2011 and have jointly developed innovative products, including factor indices and ETF products. The combination will provide Axioma’s current clients with closer integration to data from a leading family of indices, which are critical components for designing investment strategies. Additionally, Deutsche Börse’s index business clients will benefit from access to Axioma’s analytics that allow for creation and testing of custom indices.
The combined company will be led by current Axioma CEO Sebastian Ceria. A number of the Axioma management team, as current owners, will reinvest around US$105m of their sales proceeds into the combined company alongside General Atlantic.
As a result, and depending on the roll-over:
- Deutsche Börse is expected to own approximately 78% of the new company,
- General Atlantic around 19%, and
- the Axioma management about 3%.