Colt Group, a business communications and IT services provider, has acquired a majority stake in MarketPrizm, the trading infrastructure and market data supplier owned by agency broker Instinet via its Chi-X Global subsidiary.
Under the terms of the deal, there is no initial consideration payable by Colt on the basis that it has committed to fund the business through its next phase of growth. Chi-X Global, an alternative trading venue operator, will retain a minority stake in MarketPrizm. Colt expects the acquisition to have an impact on reported earnings before interest, taxes, depreciation and amortisation of up to €10 million this year, reflecting both the costs of the transaction and funding the business.
According to Colt, combining its network and hosting capabilities with MarketPrizm's trading infrastructure expertise will help to meet the increasingly sophisticated requirements of trading firms. Furthermore, the deal is expected to provide the impetus needed for MarketPrizm's development and expansion into new asset classes and geographies.
Tanuja Randery, currently head of Colt's global business division, will become CEO of MarketPrizm, replacing John Lowrey.
Randery has also worked as vice president of strategy at hardware solutions provider EMC and as an associate partner at McKinsey. Lowrey, who was appointed CEO of MarketPrizm towards the end of last year following a reshuffle of Chi-X Global's management, will continue to provide strategic oversight as a member of the MarketPrizm board.
MarketPrizm is a division of Chi-X Global's technology unit, Chi-Tech that was established in November 2008 after the market operator's purchase of technology company Cicada. It offers market data feed handling technology and a fully managed low-latency network for trading customers to connect to European trading venues.
“Providing market data and trading infrastructure services is a natural step for Colt as we pursue our vision of becoming Europe's leading information delivery platform,” said Colt CEO, Rakesh Bhasin. “With our strong existing financial services customer base, this transaction will extend Colt's finance sector capability and presence and create new opportunities to provide trade execution services to clients in equities and other asset classes in Europe and Asia.”
“Colt's core knowledge and expertise of networks and data centres, combined with MarketPrizm's robust trading infrastructure offering, should make MarketPrizm an even more compelling offering for firms looking to trade the rapidly evolving European and Asian markets,” added Fumiki Kondo, CEO, Instinet and Chi-X Global chairman.
Four firms are expected to buy stakes in Chi-X Global in Q2 2011, following its successful implementation of cost-cutting measures, made in the last year. Lowrey's move was part of this process, which saw a reduction in the number of senior staff.