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ConvergEx Arranges Sale to Private Equity Firm

CVC Capital Partners will buy the stake held by GTC. ConvergEx sets aside plans for an I.P.O.

ConvergEx Holdings signed a deal to sell ConvergEx, its technology company, to private equity firm CVC Capital Partners, the company announced on Wednesday.

As a result of the pending sale to CVC, ConvergEx is scrapping plans it had to raise capital in a $400 million I.P.O., which it had filed with regulators in May, according to Dow Jones Newswires in a story published yesterday.

CVC will become the biggest shareholder in ConvergEx, acquiring the stake in ConvergEx held by GTCR, the Chicago-based private equity firm, in an all-cash transactions expected to close in the fall. Bank of New York Mellon will remain as a minority shareholder along with the existing ConvergEx management team, who will continue to manage the company, according to the ConvergEx release.

ConvergEx is a big provider of software products and technology-enabled services to hedge funds, traditional asset managers, broker-dealers, corporations and plan sponsors.

It also operates an agency-only brokerage business, which executes orders for customers in stocks and options and finds them the venue with the best price. According to Dow Jones Newswires, the firm estimated its customers' business to represent about 9 percent of all U.S. stock trading activity and nearly one-third of all options trade.

ConvergEx is a technology company formed in 2006 by combining the assets of Eze Castle Software with those of BNY Mellon, such as Westminster Research. The company has over 1,200 employees in 22 locations worldwide and partners with more than 4,000 customers accessing over 100 global markets. Over the past five years, ConvergEx has expanded its business through a series of acquisitions and organic growth. In addition to acquiring Eze Castle’s order management system, ConvergEx acquired Liquidpoint, an electronic options trading platform, Cogent Consulting, a developer of commission management software and North Point Trading Partners, a boutique prime brokerage firm. Last year, it acquired RealTick, a global multi-asset execution management system.

“ConvergEx is a best-in-class software and technology provider to asset managers and financial intermediaries with strong positions across its broad portfolio of products and services. We are excited to partner with its highly regarded and exceptionally deep management team,” commented Kamil Salame, CVC Partner and Head of the U.S. Financial Institutions Group. “The company is well positioned to benefit from the continued growth of capital markets globally and, given CVC Financial Institutions Group’s global resources and CVC’s worldwide office network, we believe our partnership will be complementary.”

In the release, CEO Joseph Velli said ConvergEx has grown substantially since inception. “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," said Velli.

According to Dow Jones Newswires, ConvergEx had been pursuing the I.P.O. strategy despite the broad decline in the stock market trading volumes which lowered brokerage and exchange profits, but also had been in talks with several private equity firms for what is calls a “dual track” process.

“We had a number of attractive offers and opportunities before us, but we believe that CVC will be the best partner in helping us accelerate our growth even more as we go forward,” added Velli in the release.

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

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