The marriage of Nasdaq and Verafin will produce a leader in “Anti FinCrime”, they said in a statement, bringing Verafin’s best-in-class software into a stock exchange with relationships with the world’s biggest financial institutions. It said the “Anti FinCrime” sector is now worth US$12.5 billion and is expected to grow at a 17 percent annual pace through 2024.
Nasdaq, which expects to close the deal in the first quarter of 2021, also plans to retain and grow Verafin’s headquarters, staff and management team in St. John’s.
“At the core of Nasdaq’s mission, we champion fairness and integrity in the markets that we build and in the broader financial ecosystem in which we operate, and combatting financial crime is central to achieving our goals,” said Nasdaq President and CEO Adena Friedman in a statement.
“Verafin’s innovative fraud and [anti-money-laundering] detection platform, combined with Nasdaq’s leading trade and market surveillance solution, will empower Nasdaq to play an increasingly important role in building stronger economies around the world.”
The acquisition, announced Thursday morning, marks the fruition of the long-standing goal of the Atlantic Canadian tech community to produce a unicorn – a technology company valued at more than $1 billion. Until now, the biggest tech exit in the region had been the purchase of Fredericton-based Q1 Labs in 2012, understood to be worth about $600 million.
Nasdaq said it is buying Verafin to combine the St. John’s company’s comprehensive suite of anti-financial crime management products with Nasdaq’s reach and established regulatory technology leadership. The goal is to create a global SaaS leader in the fight against financial crime, a worldwide problem that demands innovative action.
Founded in 2003, Verafin provides more than 2,000 financial institutions in North America with a cloud-based platform to help detect, investigate, and report money laundering and financial fraud.
Since its early days in Genesis at Memorial University of Newfoundland, the company has consistently grown its staff and revenue, which led to a series of major funding deals. It attracted a $60 million round of funding in 2014, and last year announced a $515 million equity-and-debt funding round, the largest round of growth capital ever raised by a Canadian tech company.
The information released by Nasdaq shows Verafin has maintained its steady performance since its funding round last year. In the current fiscal year, Verafin expects to book more than US$140 million in revenues, about 30 percent over the previous fiscal year. About 97 percent of its revenue is recurring, and it operates at a margin of about 26 percent.
“What makes the Verafin team very special is their focus on strategy, and the focus they’ve had from Day 1 on financial crime and how they fight financial crime,” said Genesis CEO Michelle Simms in an interview. “They have never taken their eye off where the company is headed.”
Nasdaq promised to grow Verafin’s business and create opportunities for its employees, pledging to keep its headquarters in St. John’s, where it now employs about 500 people. The team will continue to be led by Co-Founder and CEO Jamie King.
“This investment by Nasdaq, a global leader in financial technology, is a major vote of confidence and a significant win for the Province of Newfoundland and Labrador’s technology and innovation sector,” said King. “Nasdaq’s clear commitments to the province will help foster prosperity and opportunity throughout the community as we continue to grow our business.”