Cautious deployment of M&A war chests while concerns relating to IPO and equity market trading buoyancy continue.

Current market:

Fewer M&A deals as Europe's FMI tectonic plates digest acquisitions of yesteryear

We are seeing:

Commodities exchanges / clearing attract M&A interest:

• Europe: European Commodity Clearing's acquisition of BSP Energy Exchange's clearing business
• Nordics: European Energy Exchange's bid for Nasdaq Clearing Sweden's and Nasdaq Oslo's clearing and commodities exchange business (subsequently abandoned)
• Middle East: Tadawul's acquisition of 32.6% of Dubai Mercantile Exchange

Financial sponsors drive data analytics M&A activity:

• Exits: Nordic Capital's disposal of Macrobond
• Acquisitions: Francisco Partners' acquisition of Macrobond
• Investments: ETFS Capital's, Volta Ventures' and Pamica's participation in BITA's funding round

Europe's FMI adopt a tiered approach to technology M&A:

• Acquisitions of more mature technology (e.g., SIX's acquisition of majority stake in FactEntry)
• Equity investments in growing technology (e.g., Clearstream's equity investment in Digital Vault Services)
• Partnerships into promising (but untested) technology (e.g., London Stock Exchange's bespoke generative AI models JV with Microsoft)

Key drivers / challenges:

Europe's FMI prioritise different DLT / blockchain initiatives:

• Bringing asset managers closer to retail clients (e.g., Deutsche Börse's acquisition of FundsDLT)
• Providing increased access to digital asset classes (e.g., AsiaNext's launch of cryptocurrency derivatives trading offering)
• Expanding geographic reach (e.g., Euroclear's equity investment in, and strategic partnership with, IZNES)
• Creating a bridge between DLT and traditional infrastructure (e.g., Euroclear's first blockchain bond)
• Focusing on state-of-the-art custody capability (e.g., Clearstream's equity investment in Digital Vault Services)
• BigTech investing in long-term FMI partnerships (e.g., Microsoft's acquisition of 4% of London Stock (Exchange Group)

Availability of buyers for "liquid" FMI stakes:

• Private equity, pension funds and SWFs cash-out (e.g., Blackstone's, CPPIB's and GIC's disposals of equity interests in London Stock Exchange Group)
• Banks cash-out (e.g., Credit Suisse's and Natixis' disposal of equity interests in FundsDLT)

Trends to watch:

Cautious deployment of M&A war chests while concerns relating to IPO and equity market trading buoyancy continue

Regulators test all angles before intervention (e.g., UK Financial Conduct Authority's decision of 'no significant intervention' in benchmarks and market data vendor services verticals, following earlier concerns relating to lack of competition in wholesale data market)

Our M&A forecast

M&A volumes likely to remain moderate in the short term as Europe’s FMI tectonic plates focus on integrating previous acquisitions and delivering returns to shareholders.

LSEG is a good example of what we expect to see—digest Refinitiv and prove business case by way of £1 billion share buy-backs combinations between value-accreditive portfolio businesses.

Stock Exchanges / Clearing Houses / Trading Venues – Publicly reported deals & situations

FMI international expansion

Deal highlight:

White & Case advised European Energy Exchange on its successful auction bid to acquire assets relating to the commodities exchange and clearing business of Nasdaq Clearing Sweden and Nasdaq Oslo (subsequently abandoned).

Market commentary:

Intercontinental Exchange and London Stock Exchange Group demonstrate differing impacts from tides and torrents. US stock markets are booming again, and London is falling behind its rivals. (Financial Times–August 2023)

Number of companies listing in Europe has slumped to the lowest level since the global financial crisis. Just 34 companies were publicly listed in Europe in H1 2023. (Financial Times–August 2023)

• European Commodity Clearing: Commodities clearing, Acquisition of BSP Energy Exchange’s clearing business (March 2024)
• Saudi Tadawul Group: Commodities exchange, Acquisition of 32.6% of Dubai Mercantile Exchange (January 2024)
• European Energy Exchange: Commodities exchange, Acquisition of Nasdaq Clearing Sweden’s and Nasdaq Oslo’s clearing and commodities exchange business (June 2023)
  (subsequently abandoned)

FMI vertical integration

• SIX: Data analytics, Acquisition of majority stake in FactEntry (March 2024)

Digital FMI

Acquisitions:

• Valereum Blockchain: Stock exchange, Acquisition of Gibraltar Stock Exchange (September 2023)
• Deutsche Börse: DLT, Acquisition of FundsDLT (August 2023)
• Inversis / Banca March: Discretionary portfolio management services, Acquisition of OpenFinance (July 2023)
• Tradeweb Markets: Treasury management, Acquisition of Institutional Cash Distributors (April 2024)

Disposals:

• BME / SIX Group: Discretionary portfolio management services, Disposal of OpenFinance (July 2023)

“New age” FMI

• Clearstream: Digital asset safekeeping, Equity investment in Digital Vault Services (April 2024)
• Euroclear: Funds marketplace technology, Acquisition of (undisclosed) equity stake in IZNES (March 2024)
• London Stock Exchange: Generative AI, Bespoke generative AI models JV with Microsoft (August 2023)

Offloading of “liquid” FMI stakes

Financial sponsors:

• BCP York Holdings (Blackstone, Canada Pension Plan Investment Board and GIC): Stock exchange, Disposal of minority stake in London Stock Exchange Group (March 2024)

Banks:

• Credit Suisse: DLT Disposal of equity interest in FundsDLT (August 2023)
• Natixis: DLT, Disposal of equity interest in FundsDLT (August 2023)

Private equity dips a toe in

Acquisitions:

• Francisco Partners: Financial data, Acquisition of Macrobond (July 2023)

Disposals:

• Nordic Capital: Financial data, Disposal of Macrobond (July 2023)

Growth capital

• BITA: Index and benchmarks development software, Successful funding round led by SIX, ETFS Capital, Volta Ventures and Pamica (March 2024)

Regulator intervention

• UK Financial Conduct Authority: No significant intervention in benchmarks and market data vendor services verticals (February 2024)

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