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

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

Summary

• S&P Global and CME Group will sell OSTTRA to KKR for $3.1 billion.
• The deal is structured as a 50/50 split of the proceeds between S&P Global and CME Group.
• 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.
• KKR plans to support OSTTRA's growth by investing in technology and innovation.
• OSTTRA's management team, including co-CEOs Guy Rowcliffe and John Stewart, will remain in their current roles.
• KKR intends to implement a broad-based equity ownership program for OSTTRA's nearly 1,500 employees.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to the successful sale of OSTTRA at a significant valuation, the continued leadership of the existing management team, and KKR's commitment to investing in the company's future growth. The planned equity ownership program for employees further contributes to the positive outlook.

Positives

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

Risks

• The transaction is subject to customary closing conditions and regulatory approvals, which may not be obtained in a timely manner or at all.
• Economic, financial, political, and regulatory conditions could affect the transaction.
• Potential litigation, government and regulatory proceedings, investigations and inquiries could impact the transaction.
• 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

The transaction is expected to close in the second half of 2025, subject to customary closing conditions and regulatory approvals. KKR plans to support OSTTRA's growth by increasing investments in technology and innovation.

Management Comments

• Guy Rowcliffe and John Stewart, co-CEOs of OSTTRA, expressed gratitude for the partnership with CME Group and S&P Global and excitement about the new chapter with KKR.
• Webster Chua, Partner at KKR, stated admiration for OSTTRA's mission-critical solutions and strong market position.
• Terry Duffy, CME Group Chairman and CEO, expressed confidence that KKR will further scale the business.
• John Barneson, Chairman of the Board of OSTTRA and Head of Enterprise Solutions at S&P Global Market Intelligence, stated that the transaction reflects S&P Global's commitment to active portfolio optimization.

Industry Context

This transaction reflects the ongoing consolidation and private equity interest in the financial technology sector, particularly in post-trade services. KKR's acquisition of OSTTRA highlights the value placed on companies providing critical infrastructure and workflow solutions to financial institutions.

Comparison to Industry Standards

• The $3.1 billion valuation of OSTTRA is a significant multiple of its revenue, reflecting the strategic importance of post-trade infrastructure.
• Comparable companies in the post-trade space, such as DTCC and Euroclear, command high valuations due to their essential role in the financial ecosystem.
• Private equity firms like KKR are increasingly investing in financial technology companies, seeking to capitalize on the growing demand for efficient and innovative solutions.
• The broad-based equity ownership program planned by KKR is a common practice in private equity-backed companies, aiming to align employee incentives with company performance.

Stakeholder Impact

• Shareholders of S&P Global and CME Group 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 innovation and enhanced services under KKR's ownership.
• The transaction is not expected to have a material impact on suppliers or creditors.

Next Steps

• Obtain customary regulatory approvals.
• Satisfy other closing conditions.
• Complete the transaction, expected in the second half of 2025.
• KKR to implement its investment strategy and support OSTTRA's growth initiatives.
• Implement a broad-based equity ownership program for OSTTRA employees.

Key Dates

Keywords

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