US investment firms Clearlake Capital Group and Motive Partners have agreed to acquire the BETA+ assets from London Stock Exchange Group (LSEG) for a total cash consideration of $1.1bn before tax and separation costs.
The deal is expected to close in the second half of 2022, subject to regulatory approvals and other customary closing conditions.
BETA+ provides back-office processing solutions to the wealth management industry, including securities processing and tax reporting.
The BETA+ assets include the assets of BETA (securities processing, custody, clearing, and asset servicing technology), Maxit (cost and tax basis reporting software), and Digital Investor (front-end client solutions).
In the year ended December 31, 2021 it had revenues of approximately $300m, primarily linked to US markets.
“BETA+ has established a strong position in the self-clearing technology space and broader wealth management ecosystem with a reputation for meeting the unique needs of global financial institutions and their clients,” said Behdad Eghbali, Co- Founder and Managing Partner, and James Pade, Partner of Clearlake.
LSEG anticipates returning a significant proportion of the net proceeds to shareholders, via a buyback, while still continuing to support organic and inorganic growth opportunities and maintaining our leverage ratio within the target range of 1-2x.
LSEG said in a statement that further detail will be announced in due course with any buyback likely to commence in Q3.
The divestment of BETA+ and the new strategic partnership reposition the growth profile of the Wealth segment of LSEG’s Data and Analytics business which will now target mid-single digit annual revenue growth in the medium term.
Andrea Remyn Stone, Group Head Data & Analytics, LSEG said: “The divestment of BETA+ will focus LSEG’s Wealth business on meeting our customers’ needs in high growth areas. This includes the provision of data, analytics and workflow tools where we have deep capabilities and where LSEG is driving innovation.
In addition, LSEG has entered into a new long-term strategic partnership for data, content and tools with BETA+ and portfolio companies owned by Motive and Clearlake.
Sabrina Bailey, Global Head of Wealth, Data & Analytics, LSEG said: “We are delighted to establish a long-term strategic partnership with BETA+ as we reposition our Wealth business to focus on LSEG’s core strengths. We look forward to collaborating with Motive and Clearlake as we deliver on this exciting opportunity in the growing Wealth segment, offering scaled access to new market channels for our business.”
The wealth management industry continues to demonstrate opportunities, bolstered by tailwinds across the spectrum including a significant movement in technology modernization, industry consolidation, increases in retail trading, and democratization of the capital markets.
Over recent years, the space has exhibited growth across various avenues, compounded by investment from new and established players.
This has presented opportunities for well-placed investors and innovators to digitize legacy technology, expand product offerings to address unmet demand, and create efficiencies along the value chain.
Founded in 2006, Clearlake Capital Group is an investment firm operating integrated businesses across private equity, credit and other related strategies.
Motive Partners is a specialist private equity firm focused on building, backing and buying the technology companies that enable the financial economy.
By acquiring the BETA+ assets from LSEG and creating a standalone platform, Clearlake and Motive intend to execute on a buy and build strategy, supported by Clearlake’s proprietary O.P.S.® framework and Motive’s value creation plan developed by Motive Create and the Industry Partner team.
This will include building critical platform infrastructure on the back-end of the Wealth workflow, with a plan to utilize proprietary expertise and know-how to augment the core BETA+ platform technology, enhance functionality for the existing blue-chip client set, enter new and high-growth markets, and cultivate partnerships within the combined Wealth ecosystems.
Stephen C. Daffron, Co-Founder and Industry Partner of Motive Partners, said: “BETA+, together with our other portfolio companies, will be focused on creating frictionless, digital-first experiences for clients, advisors, and home office personnel with streamlined processes, reduced costs, and increased retention and satisfaction, ultimately making it easier for Wealth clients to obtain solutions which address their financial needs.”
