Nasdaq will pay $2.75 billion in cash for the privately-held provider of anti-financial crime management solutions.

Global technology company Nasdaq (NASDAQ: NDAQ) announced today its acquisition of Canada-based Verafin for $2.75 billion payable in cash. Verafin’s cloud-based software platform serves customers with fraud detection, money laundering protection, and high-risk customer management. The 2003-founded firm counts more than 2,000 financial organizations as its customers. (Nasdaq)

Spectrum Equity, a growth equity investor based in Boston and San Francisco, and Information Venture Partners, a FinTech-focused venture capital firm based in Toronto, are both significant investors in Verafin, according to Nasdaq.

Both have agreed to sell their stakes as part of this transaction.

Verafin + Nasdaq = Global SaaS leader to combat financial crime

In addition to operating exchanges worldwide, Nasdaq is also a technology provider on the markets to many banks and institutions.

It also provides trade surveillance systems to about 250 banks, exchanges, broker-dealers, and buy-side organizations for detection of market manipulation.

“The agreement will combine Verafin’s comprehensive suite of anti-financial crime management products with Nasdaq’s reach and established regulatory technology leadership to create a global SaaS leader in the fight against financial crime, a worldwide problem that demands innovative action,” Nasdaq said in a statement.

Nasdaq attributed Verafin’s “extraordinary” growth and “stellar” client retention to its intelligent technology.

Verafin uses intelligent analytics, machine learning, and powerful visualization and investigation tools for accurate fraud detection.

Outlook

According to Nasdaq, Verafin’s cloud products deliver about 30% compounded annual recurring revenue growth (ARR) in a market sized at an estimated $13 billion.

Nasdaq will use its relationships with leading Tier 1 and Tier 2 banks across the world to further accelerate the growth of Verafin’s solutions.

The acquisition will be EPS-accretive with effect from the beginning of 2022.

Verafin will generate over $ 140 million in revenues in 2021. The transaction is therefore at a multiple of about 19.5 times of revenue.

This is “in line with high-growth SaaS companies,” Nasdaq said.

It will finance the acquisition with a combination of $2.5 billion of debt and cash on hand.

The deal is expected to close in the first quarter of 2021.

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