General Atlantic has taken a $250 million stake in financial data and post-trade services group Markit.
The 7.5% holding puts a valuation on Markit of approximately $3 billion and represents a shift in investment strategy by General Atlantic which has in the past favoured investments in exchange-based trading systems.
Initially established to deliver pricing and valuation services for over the counter derivatives, Markit has more recently expanded its business into the post-trade processing arena. Back office automation is viewed as a major growth market for the future as capital markets participants are pressured by politicians and regulators into taking steps to reduce the systemic risks posed by the threat of counterparty default.
Bill Ford, CEO of General Atlantic, says: "As a financial information services industry leader, Markit is well-positioned to deliver the independent, high quality products and services that market participants need."
Ford, who will personally take a seat on Markit's board of directors, says General Atlantic will assist Markit actively in developing its growth strategy further and executing "value-creating acquisitions".
Lance Uggla, CEO of Markit, says: "GA is one of the leading investment firms in financial services and having them as a partner is an affirmation of our business model and enhances the opportunity we have for building long-term value. This significant investment marks an important milestone in Markit's strategy and evolution, and we will benefit immensely from GA's support and Bill Ford's participation on our board."
General Atlantic's investment will also go some way to pacifying regulatory concern over the degree of influence exerted by major derivatives dealers in Markit's shareholder base, an issue which formed part of a US Justice Department probe into the credit default swaps market in July.