TMX Group Agrees to Acquire RAFI Indices for $490m

§ 01 Executive Snapshot

• What: TMX Group Limited has agreed to acquire RAFI Indices for $490 million.
• Who: TMX Group Limited and Research Affiliates Global Holdings, LLC.
• Why it matters: This acquisition will significantly enhance TMX VettaFi's equity portfolio coverage and is expected to be accretive to earnings within the first year.

§ 02 Key Developments

• RAFI Indices' pro forma run rate revenue was approximately US$49 million at March 31, 2026, with adjusted EBITDA of approximately US$38 million.
• The implied total valuation is US$393 million net of expected tax benefits, with a net present value of approximately US$97 million.
• The transaction will increase TMX VettaFi's Assets Under Indexing from approximately US$81 billion to US$263 billion.

§ 03 Strategic Context

• TMX Group's acquisition aligns with its strategy to enhance its index offerings and expand revenue sources, particularly outside of Canada.
• RAFI Indices has a strong legacy in index construction, specializing in fundamental factor-based strategies that complement TMX VettaFi's innovative approach to index provision.

§ 04 Strategic Implications

• The acquisition is expected to more than triple TMX VettaFi's AUI, significantly increasing its market presence and competitive edge in the index space.
• Long-term revenue growth from this acquisition is expected to align with TMX VettaFi’s high single to double-digit growth trajectory.

§ 05 Risks & Constraints

• The completion of the transaction is subject to regulatory approval, which may pose a delay or impact the final structure of the deal.
• Financing the acquisition through debt may affect TMX Group's leverage ratio and financial flexibility in the short term.

§ 06 Watchlist / Forward Signals

• The transaction is anticipated to close by the end of Q3 2026, pending regulatory approval.
• Monitoring the integration of RAFI Indices into TMX VettaFi and the realization of projected synergies will be critical to evaluate success post-acquisition.