Largest derivatives exchanges back fintech buyout from former Deutsche Börse chief


Two of the world’s largest derivatives exchanges have backed a private fund buyout of U.S. fintech group Trading Technologies by former Deutsche Börse chief Carsten Kengeter in a deal that resolves the future of a key software provider in the global futures market.

Singapore Exchange (SGX) and CBOE Global Markets are among the limited partners that will invest in 7Ridge, a London-based private equity fund owned and managed by Kengeter, which will purchase Trading Technologies.

The deal announced on Sunday evening values ​​TT at just under $ 500 million, according to a person involved in the talks.

SGX will invest approximately $ 200 million in 7Ridge in the form of cash and debt. CBOE said its investment was not large, but confirmed that it would also be a mix of cash and debt.

Chicago-based TT is widely used by banks, owner traders, hedge funds, and brokers to connect to the world’s major futures exchanges, including SGX and CBOE. But clients are watching its fate closely after its owner FSB Companies, the investment firm of former Chicago trader Frank Brumfield, hired investment bankers last year to assess its strategic options.

A year ago, TT was in talks to be taken over by Goldman Sachs, which sank as clients and exchanges balked at having a key part of their trading systems owned by one of their main rivals, according to two people involved.

In a related move, 7Ridge will appoint Keith Todd, an industry veteran and managing director of the Aim-listed KRM22 risk management software group, as TT’s new managing director. 7Ridge is also expected to take a 25 percent stake in KRM22.

“A lot of people wanted to see TT independent and not consumed by a broker or exchange. We’ve had a star alignment that’s really helpful, ”Todd told the Financial Times. He added that the capital injection meant the business “can grow organically and acquisitions are available to us.”

Tim Geannopulos, outgoing TT chief, said there had been interest from other parties, but the company had focused on finalizing a large internal IT project.

Many of TT’s main competitors have regrouped or sold out over the past year as customers try to cut IT costs by using fewer vendors. Broadridge Financial Solutions bought Itiviti for $ 2.5 billion this year and Ion, the UK-based group, acquired Dash Financial Fidessa and Broadway. Deutsche Börse has taken a majority stake in Quantitative Brokers.

Kengeter, who is also a former UBS and Goldman banker, is the chief and major shareholder of 7Ridge. He put it in place in 2018 after leaving Deutsche Börse during a criminal investigation into his alleged insider trading. He paid 4.75 million euros to settle the case. Its directors include Veronica Augustsson, former managing director of Swedish trading software group Cinnober, and Catherine Furrer-Lech, former chief of staff at UBS under Kengeter.

Broadhaven Capital Partners and Sullivan & Cromwell advised TT on the transaction, which is expected to close by the end of the year following regulatory approvals.


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