Nordic Capital, Carlyle bid for Octopus-backed Calastone

Katharine Hidalgo
02 October 2020

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Calastone, a B2B fund network backed by Octopus Ventures and Accel-KKR, has entered the second round of its sale process, with Carlyle's technology fund and Nordic Capital in the running, according to a report by Unquote sister publication Mergermarket.

Nordic Capital is currently investing from its 10th-generation fund, which closed on €6.1bn in October 2020. The GP made its first investment from the fund last month, when it acquired a 70% stake in software company Siteimprove for around €500m.

Carlyle Europe Technology Partners IV closed on €1.35bn in January 2019. It focuses on European lower-mid-market companies focusing on telecommunications, media and technology sectors with enterprise values of €50-250m, according to Unquote Data.

Trade bidders are also competing in the process. Motive Partners, a US-based investment firm focused on the technology sector, was also bidding, but is no longer involved.

The company is being marketed based on £10.8m in EBITDA from revenues of £45m, with sources reporting it could fetch a valuation of 10x revenues. Another source predicted it is likely to be valued at a 20x-30x EBITDA multiple.

Calastone is a fund network, connecting financial organisations. The business is headquartered in London and has offices in Luxembourg, Hong Kong, Taipei, Singapore, New York, Milan and Sydney.

Calastone generates around 85% of its revenues from mutual fund order routing, which involves connecting and routing orders from investment platforms to transfer agents, automating the transaction. It has 65% market share in this segment in the UK, and is also present in markets such as Australia, with a 75% market share, as well as Hong Kong, Taiwan and Singapore.

Octopus committed £2m to Calastone in 2010. The capital was drawn from the Titan VCTs.

In June 2013, Octopus launched its first institutional investors fund, which saw four portfolio companies including Calastone sold by Titan VCTs 1-3 to the new vehicle. As part of the transaction, the VCTs retained 50% of the original investment through ownership of a stake in the new fund.

In September 2013, Accel Partners led an $18m funding round for Calastone. Octopus Investments also participated in the round.

Barclays is providing corporate finance to the vendors.