Euronext, Europe’s biggest exchange operator, has launched a bid for fund platform Allfunds as the acquisitive group continues in its quest to build a capital markets empire.
Amsterdam-headquartered Euronext has offered €8.75 per share for Allfunds, valuing the company at €5.5bn. Shares in Allfunds surged as much as 29 per cent to €9.45 after the offer was announced on Wednesday afternoon, while Euronext’s stock fell 6 per cent.
A successful takeover would mark the latest deal for Euronext, which has scooped up several exchanges and market infrastructure companies in recent years under chief executive Stéphane Boujnah. If agreed Euronext would pay through a mixture of cash and Euronext stock, Allfunds said.
The company helps connect fund management products with investors, charging buyers to access its platform and charging sellers to offer their products such as exchange traded and mutual funds. It has more than €1.3tn in assets under administration and works with nearly 3,000 fund groups, according to its website.
Euronext has said it is in discussions with private equity group Hellman & Friedman and French bank BNP Paribas about a potential deal. The two companies together own 46.4 per cent of Allfunds’ shares. Other large shareholders include Californian asset manager Capital Group and UK fund manager Jupiter Asset Management.
The offer has surprised markets, with Euronext’s shares closing 7.4 per cent lower on Wednesday.
“We struggle to understand why the Allfunds board, or key shareholders, would accept this offer when the stand-alone fair value is arguably higher and Allfunds has traded as high as €18 as recently as August 2021,” Citi analysts said. They added that Euronext’s cash portion for the deal would amount to €3.6bn. “We also struggle to understand how Euronext can offer [this cash consideration] without breaching its own net debt/ebitda thresholds.”
Jefferies analysts said Euronext had typically acquired companies in the exchange or post trade sectors. “Whilst we had not actively considered it as a likely acquirer of Allfunds . . . [the] combination has the potential to be something of a cultural fit,” they added.
Led by Boujnah, a former Santander and Deutsche Bank banker, Euronext has grown to become Europe’s biggest exchange owner, running the Amsterdam and Paris stock exchanges among others. In recent years, the company has bought several market infrastructure companies, expanding to include a sovereign debt trading venue and a clearing house.
In 2021, Euronext bought Borsa Italiana for €4.4bn from the London Stock Exchange Group in a deal that included the CC&G clearing house in Milan. Last month, Euronext said it would shift part of its clearing operations away from London and into its own Italian company, ending a reliance on its British rival.
As part of a potential Allfunds deal, Euronext would also pay a 5.5 per cent annual “ticking fee” to investors who tender their shares. That fee would be paid in cash, shares or a mix of both, Allfunds said.
