CPPIB-backed markets data startup Canalyst sold for over $400 million to Tegus

Damir Hot, left, and James Rife, right, are the co-founders of Canalyst.Rafal Gerszak/The balloon and the mail

Canalyst Financial Modeling Corp., a Vancouver capital markets data startup backed by the Canada Pension Plan Investment Board, has been bought by Tegus Inc. for between $400 million and $450 million.

The deal announced Tuesday brings together two fast-growing capital markets tech startups that had raised $90 million to $100 million in venture capital to go after a market serviced by giants Bloomberg, Refinitiv, S&P Global and FactSet Research. Systems. Other startups in the sector include AlphaSense Inc., which has raised more than $500 million from financial giants like Goldman Sachs, Bank of America, Morgan Stanley and Barclays; and Yipit LLC, backed by Highland Capital Partners and the Carlyle Group.

“We think the combined companies are incredibly disruptive,” said Christian Grunt, director of Toronto-based ScaleUp Ventures, one of Canalyst’s early investors. “They will be servicing some of the largest investment firms in the world.”

Chicago-based Tegus provides real-time access to more than 40,000 expert interviews and transcripts covering more than 22,000 public and private companies and tools to simplify the analysis of public company disclosures. It bought BamSEC, which allows users to access SEC filings and earnings transcripts, last year.

Canalyst creates financial models used by investment professionals to track thousands of stocks. The seven-year-old company employs more than 100 equity researchers in Vancouver and New York who manually enter data from the company’s public filings into spreadsheets to create and update core financial models that clients would otherwise have to use. mode. produce themselves.

Canalyst delivers its models through online software that its more than 2,500 individual clients at 400 investment firms, banks and corporations put to work on their analysis, saving them hours per share per year. It places great importance on accuracy, ensuring that data is verified by two or more people in addition to its own software. Canalyst has doubled revenue in each of the last two years and generated more than US$15 million in annualized sales at the beginning of this year, earning it 49th place on the Financial Times list of the 500 largest companies. rapid growth of the Americas in 2022.

Canalyst CEO Damir Hot said in an interview that the company, which had raised a lot of cash on its balance sheet after raising $70 million earlier this year, decided to end its days as an independent company because “this was going to be a very rare opportunity” to merge into an even stronger financial entity, as Tegus is also growing at 100 percent per year and generating free cash flow. “Virtually all of our customers love Tegus, whether they are customers or not, and many Tegus customers are big fans of Canalyst.”

Elnick and his twin brother, co-founder and co-CEO Tom, called the acquisition of Canalyst “an important milestone” for their five-year-old company in a blog post. “It helps us fulfill our vision of creating the world’s most powerful and efficient research platform for institutional investors. Clients will now be able to link expert call interviews, models and public finance all on one platform.”

Canalyst’s other backers include San Francisco’s Dragoneer Investment Group, Texas hedge fund Alta Fox Capital, Boston’s HighSage Ventures, and Canada’s ScaleUp and Vanedge Capital.

Terms of the cash and stock deal were not disclosed, but a source familiar with the matter shared the valuation with The Globe and Mail. The Globe did not identify the source as they are not authorized to discuss the matter.

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