CME Group to acquire NEX for $5.5bn
Leading US financial firm CME Group has announced that it has agreed to acquire London-based NEX Group in a deal worth $5.5bn.
CME Group, renowned as being the world’s largest futures exchange and the owner of the Chicago Mercantile Exchange, will pay approximately $14 per share for NEX, consisting of $8 in cash and 0.0444 CME Group shares that are currently valued at $158.84.
“At a time when market participants are seeking ways to lower trading costs and manage risk more effectively, this acquisition will allow us to create significant value and efficiencies for our clients globally,” said CME Group Chairman and Chief Executive Officer Terry Duffy.
“Building on NEX’s deep roots in Europe and Asia and CME’s strong technology platform, we will transform our international profile and broaden our distribution network in spot and futures FX products as well as cash, repo and futures products in US Treasuries.”
Michael Spencer, CEO of NEX, will join the CME Group Board of Directors upon closing of the acquisition, remaining with the newly combined company as a Special Adviser who will be tasked with easing the merger.
“The combination of NEX and CME will be an industry-changing transaction,” said Spencer. “The technology and innovation opportunities will be diverse and extraordinary.”
The transaction is forecast to complete in H2 2018 once the necessary approval is given from both NEX shareholders and regulators.
CB Insights: US Insurtechs Compete In A Now Global Market
In the first half of the year, insurtech companies around the world have raised US$7.4bn, nearly doubling their funding in Q2. According to Digital Insurance, insurtechs have raised US$4.8bn in Q2—an 89% increase in funding from Q1. But US firms are no longer the sole beneficiaries.
What Are the Stats?
Out of the 15 Q2 mega-rounds—those that top US$100mn—only eight included American firms. Pretty good, you might say. That’s over half! But US companies only made up 38% of the deals, which marks a 10% drop from Q1 and a 12% drop from 2020. Technically, therefore, US insurtechs are less influential than they’ve been in the past. But who says this is a bad development?
Despite my American citizenship, I’d argue that a more globally diverse insurance market is only for the best. Many of the world’s citizens who could most benefit from improved insurance services live outside of the States—and deserve local, tech-savvy services.
Why Does This Matter?
You’re always going to see the typical insurtech contenders from Western countries. For instance:
- German-based wefox: US$650mn Series C
- UK-based Bought By Many: US$350mn Series D
- US-based Collective Health: US$280mn Series F
But it’s critical that we address risk across the world. American insurtechs might be some of the most technologically skilled firms in the industry, but it’s not their first goal to address floods in Southeast Asia, crop destruction in China, and COVID complications in South Africa. That’s why we should celebrate that the recent Q2 round included insurtechs from 35 different countries.
According to CB Insights’ Q2 2021 Quarterly InsurTech Briefing, this was the first time that they’d observed insurtech activity in Botswana, Mali, Romania, Saudi Arabia, and Turkey. And ‘from a product, service, distribution, and underlying risk perspective, we—as a society and as an industry—are moving at an unprecedented speed’, says Dr. Andrew Johnston, Global Head of Willis Re InsurTech.
Just ask CB Insights. InsurTech value propositions have resonated with the world.