TMX to buy RAFI indices from Research Affiliates for $490M

TMX Group has agreed to acquire RAFI Indices LLC from Research Affiliates for $490 million (CAD683 million). The acquisition will place RAFI Indices within TMX VettaFi, the exchange operator’s differentiated index business. Closing is expected by the end of Q3 2026, subject to regulatory approvals and customary closing conditions.

RAFI reported a pro forma run-rate revenue of about $49 million (CAD68 million) and adjusted EBITDA of roughly $38 million (CAD53 million) as of March 31, 2026. TMX said the implied total valuation is $393 million (CAD547 million) net of an expected tax benefit, and the net present value of acquired assets is about $97 million (CAD135 million), mainly reflecting amortisable goodwill and intangible assets.

The deal will increase TMX VettaFi’s assets under indexing from about $81 billion to roughly $263 billion. TMX expects the transaction to be accretive to adjusted earnings per share within 12 months after closing, excluding synergies. Long-term revenue for the combined index business is expected to align with TMX VettaFi’s High Growth target, defined as high-single to double-digit growth.

TMX plans to finance the transaction with debt. Including TMX’s previously announced and pending transactions involving Cboe Australia and Cboe Canada, pro forma leverage after closing is expected to be about 2.7 times, with a plan to return to the company’s target leverage range within a year.

RAFI Indices was founded by Research Affiliates and manages more than 90 indices. The firm’s indices select and weight components using fundamental measures of size rather than market-price weighting.

Peter Conroy, CEO of Global Insights at TMX Group, noted: “RAFI Indices brings a legacy of deep research and pioneering methodologies that align with TMX VettaFi’s commitment to providing innovative and data-driven investment solutions.” Rob Arnott, founding partner and board chair at Research Affiliates, added: “Our simple idea of creating an index strategy that selects and weights using fundamental measures of size, rather than price or market value, advanced the state of the art for equity investing.”