Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Fidelity (FIS) Likely to Sell Its Capital-Markets Business

Published 11/29/2021, 06:08 AM
Updated 07/09/2023, 06:31 AM

Fidelity National Information Services FIS is reportedly in talks with Symphony Technology Group to vend its capital-markets business. According to people familiar with the matter, the deal could be valued at nearly $2 billion.

Per a person knowledgeable about the matter, the technology-centered private equity firm Symphony may announce the purchase of the assets as soon as next week. The assets will likely include Fidelity’s treasury management, alternative-trading and algorithm-based trading platforms.

Founded in 2002, Symphony invests in data analytics, software and software-enabled technology services companies.

Jacksonville, FL-based Fidelity provides banking and payments technology solutions, processing services and information-based services to the financial services industry. Fidelity prioritizes long-term growth via its ongoing investments in technology and innovation across the high-growth markets to expand its total addressable market.

Given that the deal is being valued at around $2 billion, the sale is likely to boost Fidelity’s liquidity profile, offering it opportunities to focus on its core operations. In fact, as of Sep 30, 2021, Fidelity had total debt of $19.8 billion.

The debt level has been volatile over the past few quarters. Its cash and cash equivalents of $1.4 billion as of the same date have declined from around $2 billion since the end of 2020. The deal is also likely to enable Fidelity to reduce its foreign exchange volatility exposure with respect to its capital-markets business.

The capital market business, which is focused on serving global financial services clients with a broad spectrum of buy- and sell-side solutions, generates significant recurring revenues for Fidelity. For the three months ended Sep 30, its capital markets’ recurring revenues were majorly driven by sound sales, boosting outsourced solutions and services.

Moreover, the segment’s adjusted EBITDA margin rose primarily on higher-margin revenue mix and continued cost management by Fidelity. Thus, sale of the segment might induce a loss of revenues and unfavorably impact Fidelity’s financials in the near term.

Shares of Fidelity have lost 26.3% over the past six months compared with the 24.2% fall of its industry.

Zacks Investment ResearchImage Source: Zacks Investment Research

Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Firms Boosting Inorganic Growth

Several companies from the finance sector are making consolidation efforts to counter the low-interest rate environment and higher costs of investments in technology.

Recently, Citizens Financial (NYSE:CFG) Group, Inc. CFG completed its previously announced merger with JMP Group (NYSE:JMP) LLC. Citizens Financial announced the all-cash deal in September to augment its capital-market capabilities.

The buyout is expected to foster growth, diversify Citizens Financial's capital-market platform and provide a grander scale in the key verticals of healthcare, technology, financials and real estate.

Similarly, last month, in order to further diversify its deposit-gathering capabilities and revenue mix, Raymond James RJF announced a cash-cum-stock deal to acquire TriState Capital Holdings, Inc. TSC for $1.1 billion.

The transaction is still subject to approvals from the regulators and TriState Capital shareholders. Paul Reilly, chairman and CEO, Raymond James, said, “Importantly, this acquisition further illustrates our commitment to utilize excess capital through organic and inorganic growth that we expect to drive strong returns for shareholders over the long term.”


Investor Alert: Legal Marijuana Looking for big gains?

Now is the time to get in on a young industry primed to skyrocket from $13.5 billion in 2021 to an expected $70.6 billion by 2028.

After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could kick start an even greater bonanza for investors. Zacks Investment Research has recently closed pot stocks that have shot up as high as +147.0%

You’re invited to immediately check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.

Today, Download Marijuana Moneymakers FREE >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Fidelity National Information Services, Inc. (FIS): Free Stock Analysis Report

Raymond James Financial, Inc. (NYSE:RJF): Free Stock Analysis Report

Citizens Financial Group, Inc. (CFG): Free Stock Analysis Report

TriState Capital Holdings, Inc. (TSC): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

Latest comments

i just looking this platform
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.