Carlyle Explores Sale of Calastone Amid Growing Tech Investments

Carlyle's Strategic Move to Sell Calastone

Carlyle, a notable player in the private equity sector, has recently started discussing plans to potentially sell Calastone, its British network and data business specializing in funds. This initiative reflects ongoing interest in financial technology, particularly as investments in this area continue to surge.

Engaging Investment Bankers

To facilitate this potential transaction, Carlyle has engaged investment bankers to explore the sale process. Barclays has been brought on board to assist in evaluating offers for Calastone, which operates out of London and provides a crucial marketplace for trading and settling investment funds using blockchain technology. This innovative platform not only streamlines trading processes but also offers valuable data insights into fund flows.

Calastone’s Unique Business Model

Calastone integrates blockchain technology to automate several manual operations that aid asset and fund managers, alleviating challenges associated with rising operational costs and inefficiencies. Currently, Calastone serves around 4,000 fund distributing and managing clients across 57 countries, processing an astonishing £270 billion in investment value every month.

Potential Valuation and Market Interest

If the sale goes ahead, industry experts suggest that Calastone could secure a valuation exceeding 20 times its earnings before interest, tax, depreciation, and amortization (EBITDA). This could translate to an estimated sale price of around £600 million, reflecting the buoyant market for financial technology businesses. The bidding process is expected to start soon, signalling heightened interest from various types of buyers.

Competition in the Financial Technology Sector

The competition for Calastone's acquisition can be expected to be fierce. Many global exchange and market infrastructure providers, alongside private equity firms, are likely to show strong interest, given the rapidly growing demand for tech solutions in finance. A notable recent acquisition in this arena was BlackRock's purchase of Preqin for £2.55 billion, underscoring the lucrative opportunities available in this market segment.

Carlyle's Background and Future Aspirations

Carlyle has amassed a substantial portfolio, managing assets totaling $447 billion. Its acquisition of Calastone from Octopus Ventures and Accel in 2020 was part of a broader strategy to position itself in the expanding financial technology landscape. Additionally, Calastone’s management team, led by CEO Julien Hammerson, retains a minority stake, indicating their ongoing commitment to the company’s future growth and innovation.

Growth Metrics at Calastone

Financial performance at Calastone has shown promising growth, with revenues reaching £68.3 million in 2023, up from £60.3 million the previous year. Such figures seem to highlight the ongoing demand for its services and the firm’s resilience even amidst a fluctuating economic environment.

Frequently Asked Questions

What is the main purpose of Carlyle's sale exploration?

The primary goal is to assess the potential market value of Calastone and attract bids from interested parties in the financial technology sector.

How does Calastone utilize blockchain technology?

Calastone employs blockchain to automate operational tasks such as order routing and transaction reporting, which helps enhance efficiency in financial processes.

Who are the main competitors looking into acquiring Calastone?

Interest is anticipated from global exchange entities, market infrastructure groups, and private equity firms, reflecting a broad competitive landscape.

What were Calastone’s recent revenue figures?

Calastone recorded revenues of £68.3 million in 2023, an increase from £60.3 million in the previous year.

When can we expect the sale process to begin?

The process is still in its preliminary stages, with expectations for an auction to commence soon.

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