The London Stock Exchange is selling some of its back-office technology for wealth management firms for $1.1 billion in cash.
Private equity firms Clearlake Capital Group and Motive Partners will acquire BETA+, a business that includes three underlying technologies that collectively brought in $300 million of revenue for LSEG in 2021. BETA+ has approximately $6 trillion in assets on the platform from some of the largest wealth management firms, including Wells Fargo Advisors, LPL Financial and Vanguard.
The most significant component is BETA, a securities processing engine used by large wealth management firms to execute trades and send orders to the clearing houses. BETA+ also includes Maxit, a tax reporting software, and Digital Investor, a client-facing dashboard of holdings data.
But the real benefit is the tight integration between all three pieces, said Sabrina Bailey, LSEG’s global head of wealth, data and analytics.
“If you think about this from the advisor’s perspective, you’ve got the backend technology feeding in securities information for your trades, then that flows into tax reporting about how the trades generate a tax impact for the end investor, and then into Digital Investor [for clients] to see the aggregate portfolio with the same view that the advisor has,” Bailey said. “We brought the three together into a seamless solution for customers.”
That could make BETA+ a natural fit with other wealthtech companies in Motive and Clearlake’s portfolios.
In a statement, Motive and Clearlake said they are “focused on the long-term strategic partnership between BETA+, [the] other portfolio companies and LSEG to offer new products and greater operational efficiencies to clients across these various platforms.”
“BETA+, together with our other portfolio companies, will be focused on creating frictionless, digital-first experiences for clients, advisors and home office personnel with streamlined processes, reduced costs and increased retention and satisfaction, ultimately making it easier for wealth clients to obtain solutions which address their financial needs,” Stephen Daffron, Motive’s co-founder, said in a statement.
Bailey and Clearlake declined to comment on future plans for BETA+.
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The startup has emerged as a significant competitor to Envestnet’s dominance.
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The wealthtech provider could command a valuation of $8 billion to $10 billion.
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In February 2021, Motive and Clearleak partnered on a recapitalization deal that
“I presume that this transaction is for the benefit of InvestCloud, which with BETA will have enhanced credibility in the broker-dealer space as well as a robust client base that includes a major wirehouse,” Trout said.
Divesting from the technology will allow LSEG to focus on its core strength in data, analytics, workflows and information services, Bailey added.
LSEG will maintain a strategic partnership with Motive and Clearlake to be the preferred provider of market data on BETA+. The goal is to boost the annual revenue growth of LSEG’s data and analytics business into the “mid-single digits,” she said.
The deal is expected to close in the second half of 2022.
