Leading Investor Group To Acquire Majority Interest In Island ECN

12/1/00 - The Island ECN, Inc., the technology leader in alternative trading systems, announced today that a group of the nation’s leading private equity firms, led by Bain Capital and featuring TA Associates and Silver Lake Partners, has agreed to acquire a majority stake from Datek Online Holdings. Island is one of the premier electronic marketplaces for U.S. equities, accounting for approximately one-out-of-every-eight trades on Nasdaq.

As a result of this transaction, Island will be an independent company. Previously, Island was a subsidiary of Datek Online Holdings. After this transaction, the investor group and management will have a combined ownership of over 90 percent, with Datek’s ownership reduced to less than 10 percent.

“Island’s strategic partnership with these elite private equity institutions will reinforce Island’s reputation as one of the most innovative and technologically advanced marketplaces in the world,” said Matthew Andresen, Island ECN President and CEO.
So far this year, Island has traded more than 47 billion shares, worth over $3.15 trillion. In the third quarter 2000, Island’s share volume increased 88 percent over the third quarter volume a year ago. In October 2000, Island’s average daily share volume – over 270 million shares – experienced a 40 percent increase from Island’s average daily share volume in the third quarter 2000. Yesterday, Island set a new record by executing over 360 million shares. “Island’s ability to grow, and even flourish in this very weak market is a testament to the strength of Island’s business model,” said Steve Pagliuca of Bain Capital.

As a result of this diversification of ownership, Island will step up its ongoing efforts to become the nation’s first for-profit exchange. “We have been pleased with the encouragement received from the U.S. Securities and Exchange Commission about our plans for this sort of diversification, and expect today’s announcement to be viewed favorably.” said Mr. Andresen.

“With almost 13 percent of Nasdaq trade volume, Island has a tremendous base upon which to build its business. We’re now looking forward to the opportunity to deliver our same superior service in the NYSE-listed environment,” said Mr. Andresen.
“With its liquid marketplace and powerful technology platform, Island ECN will be strategically positioned for strong growth under this new ownership structure," said Pagliuca. "The investment will provide Island with the resources to build out its technology and diversify its services to meet the needs of institutional and individual customers.”

Kevin Landry of TA Associates said, “Island has consistently demonstrated its leadership in one of the most competitive areas of the securities industry. Investors have demonstrated their support of Island’s business model, and we now look forward to seizing the chance to help Matt Andresen and his team build upon this great success story.”

Roger McNamee of Silver Lake Partners, said: “Island has consistently offered both institutional and individual investors some of the most sophisticated technology for executing trades. That’s why Island has averaged over 270 million shares traded daily in the month of October. I can hardly think of a more exciting opportunity than to work with the Island management team to develop the most cutting-edge technology available to investors. ”

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