Toronto-based investment firm Beringer Capital announced Monday it will acquire a majority stake in U.S.-based market news and analytics outlet Benzinga, with the goal of expanding the company’s subscriber base and events business.
The deal values the Detroit-based company at US$300-million, according to Beringer Capital chairman Perry Miele, and was financed by Royal Bank of Canada. Benzinga founder Jason Raznick, 43, will retain a significant stake.
The company says it is one of the largest vendors of financial news to North American brokerages, attracting 25 million readers each month and e-mailing newsletters to more than one million subscribers. Founded in 2010, Benzinga now employs about 150 contributors, of whom 75 are full-time employees.
The acquisition is the latest in this year’s hot deal market. Will Fischtein, managing partner at Toronto-based consulting firm Beacon Mergers & Acquisitions, credits the low cost of capital for the M&A boom. However, he said, acquisitions involving news outlets are rare.
Mr. Raznick said revenues from Benziga’s subscriptions for content and financial information, advertising, events and licensing have grown nearly 500 per cent in the past three years, in part owing to the growth of the self-directed investor market. Investors opened more than 2.3 million do-it-yourself accounts last year, up from about 850,000 the previous year, according to Investor Economics, a financial services research firm.
“When companies like Robinhood started zero-commission investing, it changed the game. People realized they could open up brokerage accounts and not pay a fee,” Mr. Raznick said. They don’t just need to rely on a financial adviser.”
In addition to its proprietary analytics tools, Benzinga provides services for online brokerages including Robinhood, TD Ameritrade, Questrade and Fidelity Investments. The company competes with other financial news platforms including Business Insider, Axios and Bloomberg News in providing analysis for investors.
According to Mr. Miele, the growth of the DIY investment market was one of the reasons they were attracted to Benzinga. The private equity fund specializes in mid-market media and marketing services in the commerce and data sectors.
“Investors want to be in control of the decisions they’re making, so they need high-quality information, and they will invest in that sort of data,” Mr. Miele said. He said Benzinga possesses an “authentic voice” that investors connect with.
Earlier this year, Beringer announced the acquisition of two Florida-based companies: Inman News, a real estate news company owned by Inman Group Inc., and Perform[cb] LLC, an online marketing services provider. Last year, Beringer exited its position in media and events company Adweek, which it acquired in 2016.
Mr. Raznick said he received several unsolicited bids to acquire Benzinga earlier this year, but chose Beringer Capital because of its specialized experience.
“When they bought Adweek, everyone thought the company had been left for dead, but they turned it around. We saw a lot of synergies with their portfolio companies,” Mr. Raznick said.
Mr. Raznick said he hopes to use the new capital to expand the editorial team to produce more software, data and content focusing on popular investment areas – in particular, fintech, cannabis, crypto and small-cap stocks. This will also include expanding their events: Currently, the company hosts the Fintech Awards, Cannabis Capital Conference and Crypto Festival.
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Irene Galea