A consortium led by Blackstone announced that private equity funds managed by Blackstone – together with Canada Pension Plan Investment Board (CPPIB) and Singapore’s GIC – entered into a partnership agreement with Thomson Reuters for Thomson Reuters’ Financial & Risk (F&R) business.
The Blackstone-led consortium will own 55% of the equity in a new corporation created to hold the F&R business and Thomson Reuters will retain a 45% equity stake, at an overall valuation of $20 billion.
Thomson Reuters F&R is a global data and financial technology platform that provides information and data analytics, enables financial transactions, and connects trading, investment, financial and corporate professionals around the world.
Martin Brand, a senior managing director at Blackstone, said: “We are excited to partner with Thomson Reuters – one of the most trusted companies in financial technology.
“The F&R division has tremendous assets, including a world-leading data business, essential risk and compliance solutions, OTC trading venues, wealth management software, and a strong desktop business.
“The partnership with Blackstone provides an opportunity to increase efficiency and accelerate revenue growth through innovation and focus on creating uniquely compelling products for F&R’s customers.”
Ryan Selwood, head of direct private equity, CPPIB, said: “This investment in F&R will broaden our portfolio in the growing financial technology space.
“We are very pleased to support the evolution of a global market leader.”
Choo Yong Cheen, chief investment officer of private equity at GIC, said: “As a long-term value investor, we believe this business transformation will enable F&R to focus on its core customer base and be in a strong position to continue delivering innovative products to the market.”
Reuters News will continue to remain a part of Thomson Reuters and will not be included in the assets being acquired.
The new F&R will enter into a 30-year contract for the exclusive rights to distribute Reuters News through all F&R products.
The consortium said Reuters News will continue to have complete editorial independence from F&R and Thomson Reuters.
Thomson Reuters said it will receive $17 billion in gross proceeds at closing funded by $14 billion of debt and preferred equity to be incurred by the partnership and a $3 billion cash equity contribution by Blackstone.
“This deal strengthens F&R and should accelerate its growth and benefit its customers across the sell-side, buy-side and trading venues,” said Jim Smith, CEO of Thomson Reuters.
“Blackstone’s strong relationships in the financial services industry and long and successful history of corporate partnerships will help F&R provide new and innovative products and services, drive further efficiencies and navigate ongoing industry consolidation.
“I am proud of the F&R organization and all of the hard work that has gone into turning around the business over the last six years.
“Today’s announcement reflects the strength of the F&R business and its future potential. We believe F&R will be even stronger with Blackstone as a partner.
“The transaction will provide immediate value to Thomson Reuters shareholders and our ownership interest in F&R will enable Thomson Reuters to participate in the future upside of the business.”
The new partnership will be managed by a 10-person board composed of five representatives from Blackstone and four from Thomson Reuters.
The President and CEO of the new partnership will serve as a non-voting member of the board following the closing of the transaction.
Thomson Reuters said that at the closing of the proposed transaction, F&R and Reuters News will sign a 30-year agreement for Reuters to supply news and editorial content to the new partnership.
Under the agreement, F&R will pay Reuters a minimum of $325 million annually.
For the duration of the news contract, Thomson Reuters will grant F&R a license to permit F&R to brand its information feeds and products/services with the “Reuters” mark, subject to applicable limitations and restrictions set forth in a trademark license agreement.
The transaction is expected to close in the second half of 2018.