Interdealer broker Icap has agreed to buy FX settlement outfit Traiana for $238 million in cash and $9 million in shares.
The acquisition of Traiana will be initially financed using a new debt facility on similar terms to Icap's existing £350 million arrangement.
California-based Traiana's Harmony network is used by over 50 banks for post-trade processing of FX transactions. To date, the firm has invested $90 million in growing its business. Annual revenue for the year ending 31 January 2008 is estimated to be up 40% on 2007 at $15 million.
It is estimated that there are 500 million transactions annually in the OTC markets, which cost $5 billion to process. Over the years, Icap CEO Michael Spencer has invested heavily in firms specialising in automation of back office OTC processing, from TriOptima in 2001 to Reset in 2006.
"Post trade services is an area where technology innovation is creating exciting new business opportunities for Icap and is an increasingly competitive necessity in growing market share in our broking business," he says. "More efficient post trade processing increases the velocity of trading in our markets and facilitates the adoption of electronic trading."
Following the acquisition, the senior management and founders of Traiana, including CEO Gil Mandelzis, will remain with the business reporting to group COO Mark Yallop.
Icap's acquisition comes amid surging growth in global FX markets, with volumes expected to multiply over the coming years due to an explosion in algorithmic trading techniques. The move follows last-year's purchase of spot trading platform EBS.