Apex Clearing Holdings LLC (“Apex” or the “Company”), the fintech for fintechs powering innovation and the future of digital wealth management, and Northern Star Investment Corp. II (“Northern Star”) (NYSE: NSTB), a publicly traded special purpose acquisition company, today announced that they have entered into a definitive merger agreement. As a result of the transaction, which values the Company at a total enterprise value of approximately $4.7 billion post-money, Apex is expected to become a publicly listed company on the New York Stock Exchange under the new ticker symbol, “APX”.
Apex’s fast, secure and reliable digital custody and clearing platform, Apex Clearing, is driving transformation of the financial services industry. Apex empowers its clients, which include online brokerages, traditional wealth managers, wealth-tech, professional traders, and consumer brands, among others, with instant account opening and funding, execution of trades across a wide array of asset classes, streamlined digital asset movements, as well as trade settlement and the safekeeping of customer assets.
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Apex’s paperless products and solutions serve as the infrastructure for a total addressable market of over $100 trillion in assets, of which the firm has approximately $100 billion under custody today. Year-to-date, Apex Clearing has provided custody for $14 billion in new assets. Apex is experiencing significant growth and momentum, now serving over 200 clients representing more than 13 million customer accounts, 3.2 million of which have been opened in 2021 alone, and more than 1 million new crypto accounts.
Management
Following the closing of the transaction, Apex CEO, William Capuzzi, and Apex President, Tricia Rothschild, will continue to serve in their current roles at the combined company, supported by a deep and talented management team with substantial expertise building businesses at the intersection of financial services and technology. Northern Star Chairwoman and CEO Joanna Coles, a creative media and technology executive, will join the combined company’s Board of Directors.
“Apex combines modern technology, operational excellence, risk management, compliance and discipline to deliver dynamic, seamless and secure custody and clearing solutions for our global clients. Today, our business encompasses a comprehensive platform applying these founding principles to the full financial services spectrum,” said Mr. Capuzzi. “We are in the first inning of the digital revolution in financial services, and our merger with Northern Star will provide Apex with the resources and flexibility to accelerate our growth, scale our platform, and expand our offerings and market share alongside our clients. We are pleased to partner with Joanna Coles and Jon Ledecky at this incredibly exciting time for Apex as we strive to bring financial services into the 21st century and make investing accessible for everyone.”
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“Apex’s focus on the core tenets of trust and innovation have enabled us to develop a secure and robust platform that provides seamless trading access to retail and institutional investors alike,” said Ms. Rothschild. “Custody and clearing is not only a high cost of entry business, but also, more importantly, it is a high cost of failure business, and our clients and their customers depend on Apex to safeguard their assets. We look forward to continuing to fulfill this obligation as the digital infrastructure partner of choice for both established and emerging financial services companies navigating the markets of today and tomorrow.”
“Apex is the independent, invisible architecture that has helped launch many of the most notable fintech disruptors of our time, enabling the frictionless experiences we have all come to expect when interfacing with digital investing products,” said Ms. Coles. “The Company is constantly innovating by offering solutions like fractional share trading and crypto trading in real time that is leading the democratization of investing. Apex is at the nexus of the digital financial services revolution and is poised to thrive amid the powerful secular tailwinds and generational shift towards digitization of investment management. The Company’s unique combination of strong growth potential, leading technology, and proven management team is extremely attractive, and I am thrilled to help play a part in the Company’s long-term success.”
Transaction Overview
The transaction values Apex at an enterprise value of approximately $4.7 billion post-money and is expected to provide up to $850 million of gross cash proceeds at closing, assuming no redemptions of Northern Star’s existing public stockholders and excluding debt repayment and transaction expenses. The transaction includes an upsized, fully-committed $450 million private placement of common stock at $10.00 per share (the “PIPE Offering”) led by Fidelity Management & Research Company LLC, Baron Capital Group, Coatue, and Winslow Capital Management, LLC among other top-tier institutional investors. All Apex shareholders and management are rolling over 100% of their equity into the combined company. The proceeds are expected to be used to accelerate and support the continued build out of Apex’s platform and business as well as to partially reduce existing Apex debt obligations.
For the year ended December 31, 2020, the Company generated unaudited operating revenues of approximately $236 million and unaudited adjusted EBITDA of approximately $86 million.
The Northern Star Board of Directors and Apex Board of Managers have unanimously approved the proposed merger and the related transactions, which are expected to be completed in the second quarter of 2021, subject to, among other things, regulatory approval, the approval by Northern Star’s and Apex’s stockholders of the proposed merger and satisfaction or waiver of other customary closing conditions.
