Nasdaq has agreed to buy software company Adenza for $10.5 billion – a deal that will give private equity firm Thoma Bravo, Adenza’s owner, a 14.9% stake in Nasdaq and a seat on the board as part of the deal.
Thoma Bravo can in part thank regulators for the successful exit – tightening compliance rules, e.g. around shareholding disclosures, have put wind in the sails of regulatory software specialist Adenza.
Tal Cohen, President of Market Platforms, Nasdaq, said in a release on June 12: “Since the implementation of Dodd-Frank in 2010, banks have increased their compliance costs by more than $50 billion per year.”
“With Adenza, we will have a more complete suite of essential software and technology solutions that make managing risks and complying with regulations simpler and more efficient for our clients,” he added.
What is Adenza?
Adenza was formed through the combination of Calypso and AxiomSL in 2021. The two provide treasury, risk, and collateral management, and regulatory and compliance software respectively for financial services customers – available either on-premises or via the public cloud.
At the time of their merger under Thoma Bravo in 2021, Adenza boasted more than 60,000 users across the world’s largest financial institutions “spanning global and regional banks, broker dealers, insurers, asset managers, pension funds, hedge funds, central banks, stock exchanges and clearing houses, securities services providers and corporates.”
Adenza’s AxiomSL Regulatory Reporting client base that year represented $45 trillion in total assets and included 80% of Global Systemically Important Banks (G-SIBs), a contemporaneous press release noted.
Nasdaq CEO Adena Friedman said the acquisition “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.”
As Bloomberg notes, software now accounts for more than a third of Nasdaq’s annualized recurring revenues: “Software sales to financial firms are more predictable, insulating the business from trading volatility.”
The transaction, Nasdaq said, enables it to “serve an expanded client base with holistic, multi-asset-class, and cloud-enabled risk and regulatory management solutions” and brings additional relationships across the European banking system to Nasdaq’s strong presence in North America and the Asia Pacific region, positioning the business to meet worldwide demand for outsourced risk management and regulatory solutions.
Nasdaq expects the deal to increase its solutions businesses to 77% of total revenue from 71% today, CEO Adena Friedman told reporters. The Nasdaq Adena acquisition is for $5.75 billion in cash and 85.6 million shares of Nasdaq common stock and is subject to regulatory approvals.