December 1, 2000 -- 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. "
About The Island ECN
Island was founded approximately four years ago with the intent of providing all market participants – from individual investors to large financial institutions – with the ability to execute transactions on a level playing field, at an extremely low cost and without the presence of intermediaries. During the third quarter 2000, Island's trading volume exceeded 12.42 billion shares, which accounted for a total dollar volume of more than $830 billion. Visit Island at www.island.com.
About Datek Online Holdings Corp.
Established in 1998, privately held Datek Online Holdings Corp. is one of the fastest-growing financial services companies in the United States and through affiliates provides swift access to financial services through innovative technology. The Company's primary businesses are Datek Online Brokerage Services LLC, a pioneer in the online brokerage industry; iClearing LLC, a securities clearing operation; and Watcher Technologies, a provider of cutting-edge trading systems for the professional trading industry.
About Bain Capital
Bain Capital is a global private equity firm that manages several pools of capital including private equity, high-yield assets, mezzanine capital and public equity with over $12 billion in assets under management. Since its inception in 1984, the firm has made private equity investments and add-ons in over 225 companies, in a variety of industries, including technology and communications, media and entertainment, healthcare, consumer goods and industrial products. Bain Capital partners with exceptional management teams in order to build long-term value in its portfolio companies. Headquartered in Boston, Bain Capital has offices in New York, San Francisco and London. For more information visit www.baincapital.com.
About TA Associates
TA Associates was founded in 1968 and today is one of the largest growth capital firms in the country. With offices in Boston, Menlo Park and Pittsburgh, the firm's $5 billion of capital is used to support growth, finance acquisitions and fund share repurchases and management buyouts. TA's investments are focused on growth companies in technology, financial services and health care. Since inception, TA has invested in over 320 companies, and in the last five years has helped companies raise over $15 billion through public offerings, bank financings and mergers and acquisitions. More information can be found at www.ta.com.
About Silver Lake
Silver Lake Partners is the leading private equity investment firm focused on large-scale investments in technology and related growth companies. The principals of Silver Lake, which include Jim Davidson, Glenn Hutchins, Dave Roux and the partners of Integral Capital Partners and Kleiner, Perkins, Caufield & Byers, have extensive experience investing in, managing, and financing technology and other growth companies. Silver Lake also works closely with a network of technology industry executives, who bring valuable insight and assistance in sourcing transactions, analyzing industry trends, building management teams, and adding value to Silver Lake's portfolio companies. Silver Lake has offices in Menlo Park, California and New York, New York. For more information, visit www.slpartners.com.
VP Corporate Communications and Corporate Affairs
Island ECN, Inc.