Itiviti-ULLINK Combo Sets Sights on Trading Tech Market Leader Fidessa

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The planned merger of Nordic front-office trading systems provider Itiviti with rival French supplier ULLINK is aimed at creating a global full-service trading powerhouse with a remit to take on market leader Fidessa. The merger of equals – announced today – expects to meld Itiviti’s trading and market-making capabilities with the equities and listed derivatives expertise of ULLINK, and offer global connectivity via the latter’s NYFIX network and a full range of high- and low-touch order and execution management (OMS/EMS) solutions and services.

Itiviti CEO, Torben Munch, says Ullink has been on the company’s radar since 2012, when private equity firm Nordic Capital first invested through the acquisition of Orc, now part of Itiviti along with Cameron Tec and Tbricks. Ullink received a significant investment from European private equity investor HgCapital in 2014, which recently decided to divest its stake and opened the door to acquisition. Sources familiar with the situation suggest Fidessa passed on acquiring ULLINK earlier this year, apparently unconvinced of the fit with its own business.

Nordic Capital is pitching the combined entity as a full-service technology and infrastructure provider across all asset classes for global and regional financial institutions. In this endeavor, the clear target is Fidessa, the London-based market leader that has struggled to find its place as the market prepares for the ructions of the EU Markets in Financial Instruments Directive II (MIFID II).

Indeed, the merger could be construed as an inevitable consequence of MiFID II, which is forcing trading firms to establish more strategic technology architectures in order to achieve compliance. Given the strategic nature of these investments, firms are seeking to partner with suppliers that can scale to requirements and have the longevity to see a long-term infrastructure project through to completion.

Munch says: “The merger will put Itiviti in the ranks of Fidessa and SunGard [part of FIS]. We are absolutely sure we can compete effectively. We will come to market with the freshest products as Itiviti has a brand new product portfolio based on modern architecture, and ULLINK has equally strong, flexible products. For us, the merger is exactly what we have been working on, putting a transformational company into the market.”

Growth areas for the merged company include connectivity, low-touch direct market access, regulatory compliance – where Itiviti has a MiFID II solution – and outsourced services that are already delivered by both companies, but are in increasing demand.

While a senior management team of the merged company can’t be announced until the deal has cleared antitrust and regulatory requirements, and a consultation with the French works council is complete, Munch says its initial focus will be on cross-selling and upselling to the company’s extended client base. Itiviti brings towards 400 clients to the company and ULLINK about 1500, including around 700 financial institutions and 800 firms using the NYFIX network. Client overlap is not great in numbers, but is material in terms of Tier one and Tier two banks and brokers.

The combined company will have revenues of $200 million, and towards 1,000 employees when ULLINK adds its 560 employees to Itiviti’s 430, expanding the company’s footprint and extending its reach into markets across Europe, Asia and the Americas. How the companies will be integrated will be decided after regulatory approval for the merger is received.

Will there be further acquisitions? Munch acknowledges that the combination of Itiviti and ULLINK will be a big undertaking and suggests there will be little appetite for further deals in the short term. Longer term, and with the backing of a strong private equity firm, further and acquisition remains a possibility.