FNZ sells GBST after merger blocked by UK’s competition authority

Rick Steves

In June, the CMA considered whether its concerns could be addressed by FNZ selling a narrower package of assets, rather than the sale of GBST in full.

FNZ has completed the sale of GBST to Anchorage Capital Partners, a leading global private equity fund with extensive financial services and systems experience.

The wealth management platform decided to sell the fintech firm following a failed merger due to being blocked by the Competition and Markets Authority (CMA).

FNZ to reacquire GBST’s capital markets division

Anchorage plans to make use of GBST’s Wealth Management division to execute its growth strategy and deliver solutions to clients, including support for continued investment and the rollout of the Composer platform to current and prospective clients.

Following the transaction, FNZ will reacquire GBST’s capital markets division. This will provide FNZ with the opportunity to expand its product while remaining compliant with the UK’s competition authority.

By integrating GBST’s capital markets division, FNZ will be able to cater to both existing and future clients and accelerate the growth and reach of its global capabilities in listed securities trading and post-trade processing.

Scott Webster, Managing Director of FNZ Securities, said: “We’re excited that FNZ and GBST capital markets division are coming together to expand our presence in securities trading and post-trade processing. Capital markets continues to undergo major structural change that will require service providers to renew their systems and processes. This creates a huge opportunity to combine the complementary product strengths of FNZ and GBST’s capital market division.

“FNZ reacquired the GBST capital markets division because of its talented employees, well-established products and its deep relationships with major financial institutions across the world. We are committed to ensuring these relationships, and the quality of the capital markets services, continue to be enhanced as part of the FNZ Group.”

Phillip Cave, Anchorage Capital Partners Founder and Chairman, said: “We are thrilled to acquire GBST’s Wealth Management business and are committed to further investment supporting GBST management’s long-term growth plans and future pipeline of opportunities in the UK and Australia for its market leading wealth management administration platform and services.

“We are impressed with the quality and commitment of GBST’s management team and employees, its market leading technology, and its long-standing relationships with clients and suppliers. We look forward to working with all GBST Wealth Management stakeholders in a partnership that will provide both stability and continued investment to deliver best-in-market solutions for GBST’s current and prospective clients.”

Rob DeDominicis, Chief Executive Officer of GBST, said: “This is a key milestone for GBST, and we are delighted to have been acquired by Anchorage Capital Partners, which has a strong reputation of investing in organisations like ours with outstanding market potential and an enviable list of Tier 1 financial services clients. We are pleased to have the support of Anchorage to drive continued growth, including expansion in key existing markets such as the UK and Australia.

The reacquisition of the capital markets division by FNZ is expected to complete in Q1 2022.

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CAT blocked FNZ – GBST merger

It was in June that the Competition and Markets Authority (CMA) reassessed the purchase of GBST by rival FNZ and concluded the deal could lead to poorer service and higher prices.

The reassessment followed its request to the Competition Appeal Tribunal (CAT) for a remittal of its original ‘Phase 2’ decision to block the merger. This request was made after FNZ’s appeal to the CAT.

The risks of reducing competition in the sector arise because FNZ and GBST, which are both providers of retail investment platform solutions, are close competitors and few other significant suppliers offer effective and competitive alternatives.

In addition to retail investment platform solutions, GBST also has a capital markets business, which does not currently compete with any of FNZ’s existing activities in the UK.

The CMA has considered whether its concerns could be addressed by FNZ selling a narrower package of assets, rather than the sale of GBST in full.

Indeed, FNZ followed the authority’s ruling and sold GBST with the plan to reacquire the capital markets division, which is expected to complete in Q1 2022. Terms of the agreement are not being disclosed. Both the purchaser and the transaction have been approved by the CMA.

 

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