royalblue group, which owns the multi-asset class trading platforms, market data and connectivity applications sold under the Fidessa brand, is to buy order management system supplier LatentZero. LatentZero is privately owned.
The maximum total consideration for the acquisition is £63 million, consisting of an initial consideration of £38 million and deferred consideration for each of the calendar years 2007 and 2008.
LatentZero will continue to operate as a separate entity within the royalblue group and the existing management, including Richard Jones, co-founder and CEO, and Dan Watkins, co-founder and director, will remain in place as part of the transaction.
“We are very excited at the prospect of working together with royalblue
to develop an integrated buy-side and sell-side business,” says Jones. “The products and services that royalblue offers match closely what our buy-side customers are asking for and this transaction will enable LatentZero to accelerate its strategy of delivering connectivity services, market data and analytics to its customers as well as expanding its geographic reach, scale and support services.”
He adds, “ The combination of our products positions us very well in the fast-moving investment and trading landscape and we look forward to working with royalblue as we develop these opportunities together.”
LatentZero was formed in 1999 and is headquartered in the UK. It supplies front-office software to the asset management industry. It has 75 clients, and offices in London, Boston, New York and Paris, employing around 170 staff.
Its software provides fund manager decision support, order management, execution management and investment compliance. LatentZero says its products are used to manage more than $8 trillion of assets, across equity, fixed income, foreign exchange and derivatives.
royalblue says the strategic rationale for the purchase is to offer an integrated platform for multi-asset buy-side and sell-side trading flows. It says the buy-side increasingly requires sell-side style trading tools integrated into their investment and order management processes.
“The growing sophistication of trading and the increasing regulatory burdens will continue to fuel demand for automation of business flows in both the buy-side and the sell-side and the need for rapid communication and information flow between the two sides will become increasingly important over the coming years,” the company says in a statement. “With around 1,000 buy-side firms already sending order-flow to sell-side brokers over the Fidessa network, there is already a compelling opportunity to integrate and extend the two product sets and this will be further strengthened through this transaction.”
Chris Aspinwall, chief executive of royalblue, adds that the transaction “delivers on royalblue’s well documented strategy to provide the best products and services to both the buy-side and sell-side communities. Providing this unparalleled solution to market participants will open up significant new business opportunities for us across the world. We welcome LatentZero’s staff and proven buy-side experience, and look forward to collectively taking our business to the next level.”
ArmaPartners acted as financial adviser to royalblue group and its board of directors in this transaction. Financial Technology Partners and FTP Securities together acted as strategic and financial adviser to LatentZero and its board of directors.