14 July 2011, São Paulo – Advent International, the global private equity firm, today announced that it has agreed to sell its remaining 10% stake in Cetip, S.A. (BM&FBOVESPA: CTIP3), Latin America’s largest depositary of private fixed-income securities and Brazil’s largest private asset clearinghouse, to IntercontinentalExchange (NYSE: ICE). In total, ICE will purchase 12.4% of Cetip’s shares from Advent and other selling shareholders.
Under the terms of the agreement, ICE, a leading operator of global regulated futures exchanges, clearing houses and over-the-counter markets, will acquire 31.6 million shares of Cetip common stock for approximately $512 million in cash, or R$25.50 per Cetip common share, in line with the weighted average closing price over the last 90 days. The transaction is expected to close on July 15, 2011. Upon the completion of the transaction, ICE will be the largest shareholder in Cetip.
The sale to ICE completes Advent’s exit from Cetip. Advent sold a portion of its holdings in the company’s IPO in October 2009 and sold additional shares in a block trade in January 2011.
Cetip offers registration, custody, trading and settlement services to 15,648 customers, including banks, brokerage houses, securities dealers, leasing companies, insurance companies, investment funds and pension funds. The company was created as a mutual-owned, nonprofit organization by the Central Bank of Brazil and numerous market participants in March 1986 and was demutualized in June 2008.
Advent acquired a 32% stake in Cetip in 2009, prior to its IPO, and helped transition the company into a market-focused business with a strong growth profile. With the support of Advent and two of its operating partners, Cetip reinforced its management, implemented best-practice corporate governance and instilled a culture of innovation and performance improvement in the business.
During Advent’s ownership, the company focused on launching new products, including collateral management solutions in partnership with Deutsche Börse and Algorithmics. Following Cetip’s IPO, Advent helped negotiate the R$2 billion acquisition of GRV Solutions, the leading registrar for car loans in Brazil, nearly doubling the size of the company. Over the past two years, Cetip’s net revenue has increased 3.4 times from R$165 million in 2008 to R$557 million in 2010, while EBITDA has grown 3.5 times from R$106 million to R$376 million. The company is Brazil‘s market leader in private fixed-income and OTC derivatives, with more than R$3.0 trillion (~US$1.9 trillion) in assets under custody.
Commenting on the transaction, Martín Escobari, a Managing Director in Advent’s São Paulo office, said, “We are proud to have supported a great management team during a critical time in Cetip’s development. Today, the company has world-class corporate governance and highly experienced, motivated leadership, which has consistently delivered excellent results for its shareholders. We are pleased to sell our remaining interest to ICE, a strategic, long-term investor, which we believe is well-positioned to support Cetip’s continued growth.”
Mr. Escobari, Advent’s representative on the Cetip Board of Directors, has resigned his position but will continue to support the company during a transition period. Subject to a vote at its next general shareholders meeting, ICE intends to appoint a representative to Cetip’s Board.