Incapital, an underwriter and distributor of fixed-income and market-linked securities, and 280 CapMarkets, a technology company providing best-execution trading support and price transparency, are merging to create InspereX, a financial technology-focused broker-dealer.
The transaction is expected to close by the end of the first quarter 2021, with the merger of the firms’ broker-dealer businesses to occur thereafter, subject to regulatory approval. Financial terms were not disclosed.
The business strategy for InspereX will combine Incapital’s market knowledge, products and distribution relationships made over 20-plus years and its capital strength with 280 CapMarkets’ technologies, including BondNav — the first
Leveraging technology for the creation and distribution of both companies’ products while also providing transparency and educational tools for financial advisors, institutions and issuers, is key to the merger, said Dave Rudd, president of 280 CapMarkets and president of InspereX. “The roadmap is deep. We’re just beginning to see what we can unlock today and what we can plan for tomorrow.”
Rudd said InspereX will further the “long-standing commitments of both Incapital and 280 CapMarkets to advance the principles of impact investing and sustainability, with dedicated efforts to support socially responsible investing and other [environmental, social and governance] goals for interested issuers and investors.”
Incapital Co-Founder and Chairman Tom Ricketts will be chairman of InspereX. 280 CapMarkets CEO and Co-Founder Gurinder S. Ahluwalia, will serve as Vice Chairman of InspereX.
Rudd will become the president of InspereX. Incapital CEO John DesPrez will be CEO of the new firm.
The combined firm will have about 200 employees spread across primary offices in Palm Beach County, Florida; San Francisco; Chicago; and New York City, as well as in other regional locations.
The creation of InspereX combines strengths of the two companies: Incapital, with its history of success in fixed-income and market-linked product origination, underwriting, trading, sales, and distribution, and Silicon Valley FinTech 280 CapMarkets to digitally transform how the fixed-income markets are viewed, accessed, and traded by advisors, institutions, and issuers, according to a release.
By aggregating fixed-income markets, Rudd said InspereX will promote access to fixed-income investments across asset classes, provide price transparency driven by cloud-native technology, and improve liquidity and best execution support targeting price improvements.
For fixed-income issuers, InspereX will offer the benefits of market depth, liquidity, and precisely targeted distribution to a range of clients, making it easier to diversify sources of funding and lower borrowing costs.
InspereX will also include Incapital’s market-linked products (MLP) business, which generated 2020 notional sales exceeding $5 billion and will continue to provide revenue streams to the newly created company, according to Incapital.
"Focused on distribution through independent broker dealers and banks, the professional MLP sales, trading, and product origination team provides financial advisors unparalleled web-based educational resources, access to a broad array of market-linked financial solutions issued by all major investment banks, and expertise in positioning market-linked products to attain their clients’ financial goals," a release said.
Ricketts said he co-founded Incapital in 1999 to "break down the barriers many investors and issuers faced when trying to access the full potential of the fixed-income markets, and later market-linked securities." He said it was not a level playing field then, and while it has improved over the years thanks to the emergence of new technologies and market entrants, "we believe improvement needs to accelerate for all market participants.”
The merger of Incapital and 280 CapMarkets "is highly strategic and complementary, as together we seek to drive transformation in the fixed-income markets,” DesPrez said.
