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Carlyle Group buys stake in funds network Calastone

fintech, blockchain, CalastonePrivate equity firm Carlyle Group is to buy a majority stake in Calastone, the funds network, for an undisclosed sum.

Carlyle has agreed terms with current shareholders, including Octopus Ventures and Accel, and the Calastone management will keep a minority stake.

Octopus Ventures, a venture capital firm, was one of the earliest investors in Calastone, which was founded in 2007, and intends to sell its stake to Carlyle as Calastone seeks the next stage of growth.

Funds affiliated with The Carlyle Group will invest to broaden Calastone’s product offering, technology, and international expansion.

The technology offering includes a blockchain-based ‘distributed market infrastructure’ that Calastone launched last year and which provides automation and digitalisation of fund transaction processes.

Calastone has become the largest global funds network and has “transformed the mutual funds sector through its innovative use of technology and network interoperability”, the firm said. Its network centralises the fund trading process, covering automated order routing, settlement, dividend and transfer services for £200 billion of fund manager assets.

Fernando Chueca, a managing director at Carlyle, said: “Calastone is a global leader and innovator in the funds technology industry, a large and growing market. Since its inception, the company has achieved remarkable growth through replacing legacy and complex workflows with truly innovative solutions for its clients."

Julien Hammerson, Calastone’s CEO, said: “We have made great strides in the past decade to meet the needs of our customers and their investors in reducing friction and costs within the mutual fund industry.”

He said the firm, which is based in the UK, had expanded internationally and created new opportunities in money market funds. 

Octopus Ventures invested in Calastone at seed stage in 2008, including investment from the Octopus Titan VCT, a venture capital trust. The exit represents an 18x return on the initial investment and a 9x return on the total investment. This represents an internal rate of return of over 30%.

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