European exchange group Euronext has set aside EUR150 million to fund its growth over the next three years through internal development and via a series of bolt-on acquisitions.
The war chest is part of a strategic plan developed by the exchange operator as it looks to compete in a new landscape, dominated by the $30 billion merger between Deutsche Bourse and the London Stock Exchange.
The group has set a target of revenue growth of two percent CAGR and cost base reductions of €22 million. The plan is expected to contribute €70 million additional revenue and €35 million incremental costs at the end of the period.
In a statement, the Exchange says: "Euronext will implement a disciplined innovation strategy, intensify client centricity, continue to reduce cost, strengthen its information technology and infrastructure platform, attract and develop best talent and entrepreneurs and deploy a disciplined M&A programme to accelerate its growth strategy in selected segments."
The group sys it will extend its listing business, deliver a new set of risk management and data analytics tools in the derivatives space and for corporate servicing, and seek to accelerate growth through targeted mergers and acquisitions.
States the Exchange: "In an evolving industry landscape, Euronext will carefully assess any potential opportunity resulting in a transformational transaction that will create value for clients and shareholders."
Clearing operations are excluded from 2019 targets, as the group's contracts with LCH.Clearnet expire at the end of 2018. Euronext says it is "exploring all possible avenues for the clearing of its operations".
Update Euronext has announced that it is in exclusive talks to acquire a 20% equity stake in EuroCCP for €14 million (including contribution to regulatory capital) subject to closing adjustments and regulatory approval.