ConvergEx Holdings, the parent company of US technology provider and agency broker ConvergEx Group, is to be acquired by funds advised by private equity firm CVC Capital Partners, in an all-cash transaction expected to close in the early autumn.
ConvergEx was originally formed in 2006 by combining assets of custodian bank BNY Mellon and systems provider Eze Castle Software.
Since its formation, the company has expanded through a series of acquisitions and organic growth that have focused on development of its technology-based services.
LiquidPoint, a Chicago-based options execution and trading technology firm, was bought in 2007, while G-Trade became ConvergEx's electronic execution arm in 2008 following its divestment from BNY Mellon. ConvergEx purchased Cogent Consulting, a supplier of commission management solutions to institutional money managers and broker-dealers, at the beginning of October 2009.
In November of the same year the firm acquired the US transaction services businesses of NYFIX, which included the Millennium dark pool, as well as prime brokerage NorthPoint Trading Partners. On 16 December 2011 RealTick, the multi-broker, cross-asset provider of execution management systems, was added to the firm's portfolio.
ConvergEx has over 1,200 employees in 22 locations worldwide. In a filing with the Securities and Exchange Commission in May, the firm reported that 64% of its revenues were accounted for by the technology side of the business, up from 23% in 2006, with its investment services segment accounting for the rest.
Upon close of the transaction, CVC will be the largest owner of the ConvergEx group of companies.
BNY Mellon will remain as a minority shareholder.
The existing ConvergEx management team, led by chairman and chief executive officer Joseph Velli, will remain substantial shareholders and continue to manage the company. Velli welcomed the takeover and added he was pleased that the relationship with BNY Mellon was to be maintained.
“We have had a great period of growth since ConvergEx’s inception,” he said. “In fact, during the first six months of this year, both of our business segments posted strong results and we expect to see 20% year over year growth in 2011.”
Bank of America Merrill Lynch, Barclays Capital, Deutsche Bank Securities, affiliates of Morgan Stanley and Citigroup Global Markets provided fully committed financing to CVC.
CVC holds stakes in three other portfolio companies in the financial services sector: Brit Insurance, a global insurance and reinsurance provider; RCBC, a private commercial bank in the Philippines; and Sun Hung Kai, the Hong Kong-based retail brokerage house.