Ion: the financial data group taking on Bloomberg
Andrea Pignataro has bought Mergermarket, Fidessa and Dealogic in a debt-fuelled spree
In 1999, Andrea Pignataro followed in the footsteps of Michael Bloomberg: leaving the cut and thrust of bond trading at Salomon Brothers to build a financial data empire.
Like Mr Bloomberg, who left Salomon 18 years before him, Mr Pignataro saw an opportunity to exploit the fact that financial markets were becoming more international and electronic.
He cut his teeth in the Italian sovereign debt market of the 1990s, which had turned to computerised trading earlier than the UK, France or Germany. The realisation that human traders would make way for coders and algorithms led him to build an electronic trading platform.
Since then, he has established his company, Ion Group, as an integral part of the plumbing that underpins the trading of shares, debt and derivatives around the world.
Yet, in stark contrast to Bloomberg, which is a conspicuous presence throughout financial markets, Ion’s profile is intentionally discreet, mirroring the nature of its 49-year-old Italian founder.
Even though Ion has bought 20 companies since 2005, Mr Pignataro’s group, which he runs from offices overlooking St Paul’s Cathedral in London, remains little known outside its specialist markets.
Ion, which declined to comment for this article, has now reached a size that its founder’s fondness of privacy is harder to maintain. And its debt-fuelled acquisitions are prompting more questions about the level of borrowing, the amount of job losses and the degree of dividend payouts.
After completing a £1.5bn deal in 2018 for trading software maker Fidessa and the £1.4bn acquisition of a majority stake in financial news company Acuris earlier this year, Ion is now a mini-conglomerate that spans data and trade processing, and includes brands such as Dealogic and Mergermarket. Its combined enterprise value is about £7bn. Revenues last year were about £830m.
“If you’re trading bonds or swaps, at some point in the overall chain, Ion’s connectivity network will be used,” said Russell Dinnage, head of capital markets at consultancy Greyspark Partners.
Some larger rivals such as Bloomberg, FIS and Intercontinental Exchange compete in parts of Ion’s markets, but none directly rivals Ion across all its markets, where it mostly competes with niche software companies.
Ion’s low profile stems in part from Mr Pignataro’s management style, where information is tightly controlled among a close circle of fewer than 10 advisers, according to those who have met and worked with Mr Pignataro. They describe him as “very driven” and “single-minded”.
People who have met and worked with Mr Pignataro paint a picture of a man who exerts tight control on Ion, with one banker describing him as “a complete round-the-clock workaholic”.
“With his success comes a confidence, some would say arrogance, in his personal judgment,” the person said. “One could say he’s a micromanager, and there’s a big ‘key man’ risk for his whole operation, but I have a positive spin on it.”
Mr Pignataro retains more than 90 per cent of the shares, according to corporate filings, while private equity firm Carlyle acquired a minority stake for $400m in 2016.
Ion has also eschewed public markets for funding, instead relying on private debt to finance its acquisition spree. Although Ion declined to disclose its level of borrowing, loan fund managers said that the overall group now has more than $6bn of debt.
To support these high debt levels, Mr Pignataro is known for taking an unsentimental approach to cutting costs. After acquiring Fidessa, a software maker that supplies trading tools to more than 700 brokers, Ion targeted reducing its combined 3,300-strong workforce by 15-20 per cent to make about $50m in annual savings, according to company filings.
Within acquired companies, the squeeze on investment has left many middle managers and salespeople in the line of fire and unhappy, former employees of companies bought by Ion say.
Some 300-400 senior Fidessa people have voluntarily left in recent months, on top of those in line to be made redundant, according to four former employees. None was willing to discuss Ion publicly.
The loss of experienced employees has raised questions internally over whether quality can be maintained. “Some of these products are complicated,” said one former executive. “You can only charge for a premium product if it has a premium service.”
Lenders, who have been happy to lend to the growing group, have recently started to sound the alarm over the amount of money Mr Pignataro has taken out of the business.
Rating agency Moody’s downgraded Ion Trading, the vehicle that owns Fidessa, more deeply into junk status in September because “the company had paid substantial dividends” instead of paying down debt, taking more than €125m out of the group at the start of 2019 alone.
Ion’s Irish parent company has paid €195m in dividends to entities controlled by Mr Pignataro and Carlyle since the start of 2017.
Mr Pignataro, who owns a home in Belgravia, London, has also developed a luxury estate in St Vincent and the Grenadines that he is trying to turn into the next fashionable upmarket resort
One loan fund manager said he had stopped lending to the group after recent payouts. He added that Ion’s continual acquisitions and frequent corporate reorganisations had made these shareholder distributions harder to track.
“It reminds you of the guy at the fair with three cups and a ball,” he said. “You never know where the ball is.”
In May, Ion’s lenders took a stand, refusing to back a plan for a $2bn debt deal in which Ion would have taken out another $250m dividend. The plan would have rolled together three software businesses — Wall Street Systems, Openlink and, TriplePoint — into a new company called Ion Corporates.
The aborted deal was a black eye for UBS, which has acted as Ion’s sole financial adviser for most of its deals over the past five years, earning the Swiss bank tens of millions in fees.
Mr Pignataro had a close relationship with former investment banking chief Andrea Orcel, according to people familiar with the matter, but Ion’s struggles in the loan market made executives at the Swiss bank nervous since they had just single-handedly underwritten more than $1bn of debt backing the Acuris acquisition.
UBS was ultimately let off the hook. Ion decided instead to raise $1.25bn of financing from credit fund HPS and the private debt division of Goldman Sachs and then turned to Credit Suisse to reboot the Ion Corporates deal last month, successfully raising $1.75bn of debt after agreeing more conservative terms with its lenders.
Like Bloomberg before it, Ion has now reached a size where speculation swirls about its ownership and whether one man can continue to hold it so closely.
“Andrea is this unknown person who has aggregated all these companies globally, essentially with his own money, and he’s amassed a conglomerate, but now what does he do with it?” said one of his longtime bankers. “Is he looking at an IPO or big strategic sale? No one is sure yet what his ultimate strategy is.”