ICAP agrees to acquire Traiana, Inc.
(London and New York, 10 October, 2007) - ICAP plc (IAP.L), the world’s premier interdealer broker, has agreed to acquire all of the share capital of Traiana, Inc (Traiana). Traiana is a private company and a leading provider of automated post-trade processing services to financial institutions. The agreement is conditional on regulatory approval.
The consideration for 100% of the share capital of Traiana is US$238 million payable in cash and $9 million of ICAP shares that will vest within four years.
The acquisition of Traiana will be initially financed using a new acquisition facility on similar terms to ICAP’s existing £350 million facility.
For the year to 31 January 2008, Traiana’s annual revenue is estimated to be US$15 million (up 40% on 2007). As with other electronic businesses, Traiana is highly operationally leveraged, with a high percentage of fixed costs. The acquisition is expected to be adjusted earnings enhancing within three years and will have an immaterial dilutive effect on ICAP’s adjusted earnings per share in the short term.
Traiana provides global banks, broker/dealers, buy-side firms and e-trading platforms with solutions to automate post trade processing of financial transactions. Its Harmony network is used by over 50 of the world's leading banks and has become the market standard for post-trade processing of FX transactions. Traiana’s technology is used to process tens of thousands of deal tickets every day and contributes to the orderly growth of the global financial markets. To date Traiana has invested $90 million to achieve critical mass in its markets.
Traiana’s business model is driven by the growth in the number of trades as each trade triggers multiple post trade events and Traiana charges for each event. Traiana has been very successful in operating as a neutral platform in the foreign exchange market and enjoys a great partnership with all the market participants, including ICAP’s EBS system. Traiana is committed to continuing to work closely with them all to support their businesses.
This acquisition follows a number of very successful investments ICAP has made in post-trade services in recent years, including TriOptima in 2001 and Reset in 2006. With the expansion of electronic and voice broking there has been an enormous increase in trading volumes. The market has absorbed hundreds of new participants from both emerging and developed markets through prime brokerage relationships – this in turn has created a huge increase in the pressure on middle and back offices of the banks and other market participants. It is estimated that there are 500 million transactions annually in the OTC markets (ie excluding futures), which cost US$5 billion to process. Improving the efficiency of the whole process allows volumes to increase whilst removing risk and reducing costs to all market participants.
Michael Spencer, Group Chief Executive of ICAP, commented “We are very pleased to have reached agreement to acquire Traiana, the established market leader in the automation of post trade processes in the OTC markets.
Post trade services is an area where technology innovation is creating exciting new business opportunities for ICAP and is an increasingly competitive necessity in growing market share in our broking business. More efficient post trade processing increases the velocity of trading in our markets and facilitates the adoption of electronic trading.
Traiana has shown very significant growth and we now expect this growth to accelerate further, driven by a large increase in the number and size of both momentum and macro players and algorithmic trading in the OTC markets, especially foreign exchange. There are significant further opportunities to expand and additional OTC products are being launched on the network.”
Gil Mandelzis, Traiana’s Chief Executive Officer, commented "Traiana and ICAP share a vision of providing comprehensive exchange-like post-trade services to the OTC markets. By becoming part of ICAP, Traiana will be better able to serve our existing clients and platform partners and to more rapidly expand the range of post-trade services we provide. By working together we will give our clients and the ability to grow even faster and to provide a higher level of service to their clients.”
Following the acquisition, the senior management and founders of Traiana, including Gil Mandelzis, Chief Executive Officer, will remain with the business within the ICAP Group.
Gil Mandelzis will report to Mark Yallop, Group Chief Operating Officer of ICAP plc.
ABOUT TRAIANA
Traiana (www.traiana.com) provides global banks, broker/dealers, buy-side firms and e-trading platforms with straight through processing automation for post trade processes in the OTC markets. Traiana's Harmony network is used by over 50 of the world's leading financial market participants and has become the market standard for post-trade processing of foreign exchange transactions. The company has expanded it’s product offering beyond foreign exchange into other asset classes including precious metals and credit derivatives. Traiana's solutions help to improve relationships between trading partners, reduce operational risk, and to lower costs. Traiana is headquartered in New York City with offices in London and Tel Aviv.About Sequoia Capital
Sequoia Capital provides venture capital funding to founders of startups who want to turn business ideas into companies. As the "Entrepreneurs Behind the Entrepreneurs", Sequoia Capital's Partners have worked with innovators such as Steve Jobs of Apple Computer, Larry Ellison of Oracle, Bob Swanson of Linear Technology, Sandy Lerner and Len Bozack of Cisco Systems, Dan Warmenhoven of Network Appliance, Jerry Yang and David Filo of Yahoo!, Jen-Hsun Huang of nVIDIA, Michael Marks of Flextronics, Larry Page and Sergey Brin of Google, Chad Hurley and Steve Chen of YouTube and Dominic Orr and Keerti Melkote of Aruba Wireless Networks. To learn more about Sequoia Capital visit www.sequoiacap.com.
Contact:
Haim Sadger
SEQUOIA CAPITAL
haim@sequoiacap.com
