Pan-European exchange Euronext, announced acquiring 70% of the Danish Central Securities Depository (CSD) operator, VP Securities. The acquisition significantly expands Euronext’s footprint in the Nordic region and strengthen its post-trade business.
Owned by Danish Central Bank and four major Danish financial institutions, Danske Bank, Nykredit, Nordea and Jyske Bank, VP Securities had over €1.2tn of assets under custody and 16.6m securities settled in 2019. Euronext opened an offer to all remaining shareholders.
Copenhagen- based, VP Securities was established in 1980, it is fully integrated into the European post-trade framework and it is the first Nordic CSD to receive a CSDR license and to join the European Central Bank’s Target 2 Securities (T2S) settlement system. The company provides national issuers with core services and value-added ones to the ecosystem including investor relations tools and sub-custody services. VP Securities generated DKK426m of revenue (~€57.1m) and generated an EBITDA of DKK125m (~€16.8m) last year.
Euronext offered DKK1.12bn (c. €150m2) for 100% of the shares. The company will open an offer to all the remaining shareholders with the same terms and conditions. The acquisition falls inline with the with Euronext’s disciplined capital deployment policy and commitment to maintain a strong investment grade credit rating. The acquisition process of VP Securities is expected to complete by early Q3 2020 once regulatory approvals have been received.
This is an important step for Euronext’s strategy to strengthen its post-trade business and expand its presence in the Nordic region. after previously acquiring Oslo Børs VPS and Nord Pool. The acquisition puts Euronext in a position with €2.2tn of assets under custody. Post-trade will be a major contributor to the company’s revenues after the acquisition, making a significant increase in the share of non-volume related revenue.
VP Securities will become an essential component of Euronext’s post-trade strategy with Euronext VPS in Norway and Interbolsa in Portugal, improving Euronext’s knowledge and skill in custody and settlement activities and the delivery of post-trade value-added services. The company will use the expansion of its footprint to support the development of new post-trade services and upgraded technology for each of the Euronext CSDs, while maintaining reliable and cost-efficient services supporting each local ecosystem.
Stéphane Boujnah, Chief Executive Officer and Chairman of the Managing Board of Euronext said:
Stephane Boujnah, Euronext
The acquisition of VP Securities represents a major new milestone in the deployment of Euronext’s ambition to build the leading pan-European market infrastructure. The acquisition of VP Securities will position Euronext as a leading CSD operator in Europe, and as a leading player in the Nordic region because there is no European success without a Nordic dimension. This reinforcement of our post-trade activities will allow Euronext to pursue the diversification of its topline. With about 200 talented employees, VP Securities will enable Euronext to further enhance its custody and settlement offering to deliver new and improved services for the benefit of the Danish real economy and European capital markets.
Peter Lybecker, Chairman of the Board of Directors of VP Securities said:
In a market changing from a predominantly national market to a European market, economies of scale will matter even more to be able to offer competitive services to the customers and ensure continued investments in new technology. I expect that the advantages which VP Securities may obtain as part of the Euronext Group will strengthen the Danish infrastructure within post-trade services.
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