8-K: CME Group and S&P Global to Sell OSTTRA to KKR for $3.1 Billion

CME Group and S&P Global have reached a definitive agreement to sell their joint venture, OSTTRA, to KKR for an enterprise value of $3.1 billion.

Summary

• CME Group and S&P Global are selling OSTTRA, their 50/50 joint venture, to KKR for $3.1 billion.
• OSTTRA, established in 2021, provides post-trade solutions for the global OTC market.
• The transaction is expected to close in the second half of 2025, pending regulatory approvals and customary closing conditions.
• OSTTRA's management team, led by co-CEOs Guy Rowcliffe and John Stewart, will continue in their roles.
• KKR plans to support OSTTRA's growth by investing in technology and innovation.
• KKR intends to implement a broad-based equity ownership program for OSTTRA's nearly 1,500 employees.

Sentiment

Score: 8

Explanation: The announcement is positive, indicating a successful exit for CME Group and S&P Global, and a promising future for OSTTRA under KKR's ownership. The planned employee equity program further contributes to the positive sentiment.

Positives

• The sale allows CME Group and S&P Global to realize value from their investment in OSTTRA.
• KKR's investment is expected to drive further growth and innovation at OSTTRA.
• OSTTRA's employees will benefit from a broad-based equity ownership program.
• The transaction reflects S&P Global's continued commitment to active portfolio optimization.

Risks

• The transaction is subject to regulatory approvals and customary closing conditions, which may not be met.
• Economic, financial, political, and regulatory conditions could affect the transaction.
• Potential litigation, government and regulatory proceedings, investigations and inquiries could impact the deal.
• Changes in debt and equity markets, financial markets, capital, credit and commodities markets and interest rates could affect the transaction.
• The transaction may be more expensive to complete than anticipated.

Future Outlook

OSTTRA is expected to continue its growth trajectory under KKR's ownership, with increased investment in technology and innovation. KKR will support OSTTRA in creating a broad-based equity ownership program to provide all of the company's nearly 1,500 employees the opportunity to participate in the benefits of ownership.

Management Comments

• Guy Rowcliffe and John Stewart, co-CEOs of OSTTRA, are delighted to have KKR's backing and look forward to accelerating strategic initiatives.
• Webster Chua, Partner at KKR, admires OSTTRA's mission-critical solutions and strong market position.
• Terry Duffy, CME Group Chairman and CEO, is confident that KKR will further scale OSTTRA's business.
• John Barneson, Chairman of the Board of OSTTRA and Head of Enterprise Solutions at S&P Global Market Intelligence, believes OSTTRA is ideally positioned to tackle complex post-trade challenges with KKR.

Industry Context

This transaction reflects the ongoing consolidation and private equity interest in the financial technology sector, particularly in post-trade services. Investment firms are attracted to companies that provide critical infrastructure and workflow solutions to financial institutions.

Comparison to Industry Standards

• The $3.1 billion valuation for OSTTRA is a significant multiple of its revenue, reflecting the strategic importance of post-trade solutions in the financial industry.
• Comparable companies in the post-trade space, such as those providing clearing, settlement, and regulatory reporting services, have also seen high valuations in recent transactions.
• Private equity firms like KKR are increasingly investing in financial technology companies, seeking to drive growth through operational improvements and technological innovation.
• The broad-based equity ownership program planned by KKR is a common strategy to align employee incentives with the company's success.

Stakeholder Impact

• Shareholders of CME Group and S&P Global will benefit from the proceeds of the sale.
• OSTTRA's employees will have the opportunity to participate in an equity ownership program.
• Customers of OSTTRA can expect continued and enhanced services under KKR's ownership.
• KKR will benefit from the acquisition of a leading provider of post-trade solutions.

Next Steps

• Obtain regulatory approvals for the transaction.
• Satisfy customary closing conditions.
• Complete the transaction, expected in the second half of 2025.
• Transition OSTTRA to KKR's ownership.
• Implement KKR's investment and growth plans for OSTTRA.
• Establish the broad-based equity ownership program for OSTTRA employees.

Key Dates

Keywords

OSTTRA, CME Group, S&P Global, KKR, acquisition, post-trade solutions, joint venture, OTC market, divestiture