Intend to acquire ICD. With me on the call today are Billy Hult, our CEO, Tom Pluta, our president, and Sara Furber, our CFO. After prepared remarks, we will open the call to Q&A. Earlier this morning we issued a press release and an investor presentation. Both can be accessed on our website. We intend to use the website as a means of disclosing material non-public information and complying with SEC disclosure obligations. Before starting, I'd like to remind you that certain statements in this presentation and during the Q&A may relate to future events and expectations, and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements related to, among other things, our expectations related to the proposed acquisition are forward-looking statements. Actual results may differ materially from these forward-looking statements.
Information concerning factors that could cause actual results to differ materially from these forward-looking statements is contained in the accompanying transaction release and presentation and our periodic reports filed with the SEC. In addition, on today's call we will reference certain estimated ICD financial information and estimated non-GAAP measures, as well as certain market and industry data. Information regarding these non-GAAP measures is in the accompanying transaction presentation. Information regarding market and industry data, including sources, is in the accompanying transaction presentation as well. With that, let me turn it over to Billy.
Good morning. We are excited to announce Tradeweb has entered into a definitive agreement to acquire ICD, a blue-chip cash management platform for corporate treasurers. This transaction is another important milestone in our journey as we place more bets on the table and continue to expand our electronic marketplaces and network of clients. We have spent more than 20 years improving our clients' investment experience by giving them access to more products and asset classes and building a deep community of clients across client sectors in pursuit of a single goal: creating the most transparent and efficient one-stop shop for the most important financial market participants globally. Today we continue to execute on that vision by adding a new client channel, corporates, and by expanding our product set to include institutional money market funds and other short-term investments. We constantly assess avenues for growth and innovation.
We have a successful track record of using M&A to enter new client channels like we did in retail and wholesale. Corporates happens to be a client channel we have been tracking closely for several years. We believe this is an underserved client channel from a fixed-income investment trading perspective, a current gap in our network, and it's an area where we see significant opportunity. Large corporates have steadily grown cash balances over time. S&P 500 firms now hold more than $2 trillion on their balance sheets, double what they held in 2010. In fact, a few corporates have climbed in prominence to join the ranks of the top 100 largest asset managers in the world, and several more have grown to rival small to mid-sized asset managers.
This growth in excess cash and the return of a non-zero-rate environment has magnified with efforts by corporate treasurers to optimize yield while preserving liquidity. This dynamic, coupled with increased risk management, has led to the increased adoption of electronic solutions like ICD and greater sophistication in managing a holistic investment portfolio across cash and securities like treasuries and repo. Sara will describe ICD and the financial highlights shortly, but first let me express how excited I am to welcome Tory Hazard, the new CEO of ICD, and his team of employees to Tradeweb following closing. We first met Tory a few years ago and over time have really gotten to appreciate the business his team has built as well as the strong parallels with Tradeweb. In many ways, the business model and culture couldn't be more aligned.
The way ICD wins with tech-centric innovation and deep client relationships matches the customer obsession mindset we have at Tradeweb. That's why we believe we will be able to execute on this transaction successfully and make ICD an even better business under our tent, creating greater value to our shareholders and clients. I have always said relationships matter, and increasingly for us, this deal is a door opener to not only make inroads with corporate treasurers but also asset managers and their product distribution teams, which add another dimension to our future growth story. With that, I will turn it over to Sara to review the financials and give you an overview of ICD.
Thanks, Billy. As Billy just mentioned, ICD reminds us of Tradeweb. That extends to the financials as well: a track record of double-digit revenue growth and demonstrated ability to scale with similar estimated adjusted margins to Tradeweb on approximately $85 million of estimated revenue in 2023. What was notable to us was their strong client retention and exceptional Net Promoter Scores, a testament to the value and quality of their platform and service. To recap, we are acquiring 100% of ICD for a total purchase price of $785 million, with the acquisition resulting in a tax-based step-up with a net present value of approximately $80 million. We will be funding the consideration with our excess cash at the time of closing, which we currently expect to be late third or early fourth quarter of 2024, and is subject to regulatory review and customary closing conditions.
When we integrate ICD, we plan to invest in technology and marketing during the first 12 months post-closing, which we expect may temporarily push ICD's Adjusted EBITDA margins to 47%-49% before rebounding over 50% in year two following the close. Including these investments, the transaction is expected to be accretive to Adjusted EPS within 12 months post-close, and return on invested capital is expected to be above Tradeweb's WACC in the medium term. Looking ahead, we are not expecting any changes to our balanced capital allocation strategy of continuing to invest in organic growth, making opportunistic acquisitions, offsetting annual equity dilution through share repurchases, and paying our dividend. Now let's take a closer look at ICD. Tradeweb became a client of ICD a few years ago, having previously purchased money market funds through multiple bank portals.
We were attracted to ICD's wide selection of money market funds across 40+ fund families, sophisticated analytics, and ability to seamlessly integrate with our treasury management system. This end-to-end multi-fund solution with straight-through processing has attracted over 500 clients who have invested $230 billion in funds across the platform. In fact, ICD is used by 17% of the S&P 100 and corporate treasurers across 65 industries and 45+ countries. ICD earns money by charging basis points on the balances, which are paid by the asset managers. With that, I'm going to turn it over to Tom to talk about the potential we see for this deal.
Thanks, Sara. Streamlining the corporate treasurers' investment workflow is at the core of ICD's value proposition. While ICD has done a phenomenal job in their flagship business of money market funds and building fantastic integrations with treasury management systems, the broader treasury investment workflow remains fragmented. Today, treasurers often have to log into multiple platforms to maintain liquidity, manage risk, and optimize yield and duration. Under Tradeweb's ownership, we believe we will be able to supercharge ICD's capabilities, stitching together money market funds, FX, and fixed income to create a truly differentiated and integrated one-stop shop for the corporate treasurer. In addition, we plan to cross-sell ICD's existing capabilities for a global client network.
ICD has a proven track record of selling to financial institutions such as asset managers and insurance firms, who accounted for 13% of their estimated revenue in 2023. We see opportunity to leverage our sales force to increase their penetration with financial clients. In a similar vein, we also see opportunity to leverage our global on-the-ground presence to accelerate the growth of their international business, which accounted for 35% of estimated fiscal 2023 revenue. In summary, we believe ICD has tremendous runway for growth in its core market and even more upside under our ownership. In aggregate, we estimate the U.S. revenue opportunity alone at more than $2 billion. When including the international opportunity, we would expect this to grow even further. Specifically, ICD's current U.S. TAM consists of institutional money market funds, which at ICD's pricing translates to approximately a $1.8 billion revenue opportunity.
We expect ICD's TAM to continue to grow alongside corporate cash. Under Tradeweb's ownership and leveraging ICD's connectivity with corporates, we believe we can now penetrate the remaining investment portfolio of non-money market fund investments. We believe that represents approximately a $400-$600 million revenue opportunity in the U.S. alone. Stepping back, we believe that ICD's existing business, with a track record of double-digit growth and strong margins, combined with our ambitions to unlock even more revenue opportunities as we integrate the asset, makes this deal very compelling. We look forward to reporting on our progress in the future. And with that, operator, please open the line for questions.
To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. We will be ending the conference at 10:00 A.M. Eastern Time, so please limit yourself to one question in the interest of time. Please stand by while we compile the Q&A roster. Our first question comes from Patrick Moley with Piper Sandler. Your line's open.
Yeah, good morning. Thanks for taking the question. So I've got a two-parter to start. So first, you're getting into a new business of fund distribution. Historically, you've had more of a business around matching trades and price discovery. So can you maybe speak to what your ambitions are within fund distribution? And then second, just broadly, could you maybe talk about the competitive landscape and maybe who some of the major competitors are of ICD today? Thanks.
Sure. Patrick, hi. Good morning. Happy Monday. It's Billy. I'll take the first part, then kick it to Tom for the second part. Had the five-year anniversary of the company going public last week, we were a little too busy to properly celebrate. But one of the things I was saying at the time was quoting a stat, which is the company has doubled its revenue over the last five years with 50% of that growth coming from non-rate businesses. That's a strong stat because it's strong if I'm actually quoting it. But what I would say is it's this sort of continued progression that we've made around from being a very well-regarded rates platform to what we describe and are very proud of in terms of being a real true global marketplace.
That's about putting bets on the table around our strong thesis and belief that the future is multi-asset class trading and clients really want this one-stop shop to do business. With that frame, to your question, we like the fund distribution business because ultimately, it brings us, from Tradeweb's perspective, closer to our largest clients who manage, to make an obvious point, some of the largest money market funds out there. As you know very well, we have been kind of what I would describe as kind of swimming adjacent to the world for a while as money market funds are also large buyers of Tradeweb products like treasuries, commercial paper, and repo.
And so when I kind of step back and we talk about this concept of one-stop shop for investors, what we want to do is respect the fact that they have a portfolio in which they don't always buy securities outright. So complementing securities with funds allows us to increase our wallet share and build kind of deeper relationships with our clients. And that, as you know very well, is kind of our 101 strategy. Strongly, we feel deeper relationships ultimately create more opportunity. And we have done versions of this before when we added retail and wholesale via acquisitions many years ago. And so we are optimistic and enthusiastic that corporates will prove to be, from our perspective, another lucrative channel to do this. And Tom, you hit Patrick on the competitive landscape.
Hey. Good morning, Patrick. I finally managed to clear my throat here. Yeah. As far as competition, from a product standpoint, the biggest competitor to money market funds are bank deposits. Money market funds do tend to offer more attractive yields than deposits throughout the course of the cycle. And also, if you think about some of the concerns with exposures to one single bank through deposits that occurred, that came to the top of mind last year with some of the bank challenges, I think that also makes money market funds more attractive. But as far as the portal landscape, there are a few different types of competitors. There are bank-owned portals out there. Some of the larger banks have them as well as a couple of the big trust banks. And then there are independent money market portals like ICD.
The benefit to the independent channels is there's a broader number of fund families. ICD has about 40 fund families that they offer with a wider range of investments. That's a minute on the competitive landscape.
Thank you. One moment for our next question. Our next question comes from Craig Siegenthaler with Bank of America. Your line's open.
Hey. Good morning, everyone. Thanks for taking the question. This is Eli Abboud from Craig's team. Given that money market fund AUM is at record levels and potentially top-ticking, can you speak to your ability to monetize treasurers' rotation into other products like commercial paper and governments? Thanks.
Sure. Great question. You're laying out one of the theses for this transaction. So one of the things that we think is quite complementary in talking to ICD around their existing portal, which offers money market funds, is as corporate treasurers want to explore more maturity, higher, or different types of investment products for their liquidity portfolio, Tradeweb's current offering, whether it be CDs or treasuries largely, provides that spectrum and continuum of different asset classes and different investment products. And so as we think about this transaction, not only do you have a corporate treasurer who's looking to manage their near-term liquidity through money market funds, but should, under our leadership, they decide to move further out that spectrum, which we expect them to do, we are going to have that full suite capability.
And so I think Tom talked about this maybe on the call, but as we think about that horizon, unifying that under one user interface so the corporate treasurer can actually see all those different options, that one-stop shop that Billy's referring to, actually is something that we're quite excited about over the course of the next several years.
Thank you. One moment for our next question. Our next question comes from Michael Cyprys with Morgan Stanley. Your line's now open.
Great. Thanks. Good morning and congratulations on the transaction. Just a question on the ROIC metrics. I think you mentioned the transaction here is in line with your return on invested capital objectives. I just hope you can just maybe remind us of your metrics and objectives for M&A with ROIC and otherwise, accretion, etc. Just more broadly, how you're thinking about the opportunity from M&A as you move forward from here.
Sure. Great question. Just as a reminder, we talk about, for acquisitions, both a strategic framework and a financial framework. Your piece asking very specifically about the financial. We're looking for opportunities that allow us to invest to increase and accelerate our either top line over the long term and operating margins and leverage, scale leverage over the long term. With respect to Adjusted EPS, we talk about accretion over the course of one-two years. And for ROIC, we talk about a medium term in excess of our WACC. Our WACC is, call it, between 8.5%-9.5%. At this time, we don't have any debt. And when we think about medium term, four-five years is sort of the right time frame. So that's our general framework. This transaction comfortably meets and exceeds that financial framework.
And obviously, Billy and Tom have talked quite a bit about the strategic fit as well. I don't think anything changes in terms of how we're looking at acquisitions from a financial or strategic perspective going forward. Obviously, Billy can talk a little bit about our appetite more generally.
I mean, I think perfectly described, Sir. I think we're pretty big believers in sort of the concept of momentum. So love the fact that we're doing a deal like this as our kind of organic businesses are firing the way that they are. I mean, that feels really good to us. When we take a little bit of a step back, this is the third deal that we've done sort of in a little bit over a year. And so we're going to be continuing to be ambitious. That being said, what I would say is, with a ton of support from our partners at LSEG and our partners on our board, we're rigorous buyers. And we have high standards for companies that we look at. And I would highlight something, I think, important, which is something I had mentioned before around the concept of a cultural fit.
Those aren't words. Those are really how we kind of live and breathe around our acquisitions. It is probably first and foremost one of the things that has been as attractive to us as it has been around ICD. Those are kind of how we think about stuff. But the general momentum, I feel like, around what we're doing, I think, is as strong as it's been. So feeling good about sort of maximizing our position at a moment where we feel like we're performing very, very well.
Thank you. One moment for our next question. Our next question comes from Brian Bedell with Deutsche Bank. Your line's open.
Great. Thanks. Good morning. Thanks for taking my question. Just a two-parter, if I may. Just first, just real quick on the regulatory approval process, your confidence in getting that approved. I guess it's both in the U.S. and outside the U.S. And then the second part would be just looks to me like maybe 1% accretive in the first year. I don't know if you could comment on that if we're in the right zip code. And then as you grow this business over time, given that TAM, I guess, do you think you can accelerate that 13% growth rate both on the money fund side and in the different securities that you're able to have in the platform via the Tradeweb business and then scaling that over time as well? Do you view it as more of a fixed-cost business?
Therefore, you can expand these EBITDA margins more substantially over time.
Great. Thanks for that series of questions. You'll remind me if I kind of drop any. Let me start with the regulatory approval. I think we talked about we think the time regulatory approval processes, call it, between three to six months. I'll give you a little bit more color on what we think the steps are. We need HSR, so antitrust approval, in the U.S. and then also a number of financial regulators globally. So beyond HSR, we have FINRA in the U.S. We have FCA in the U.K. And we have CMVM in Portugal. I think from a modeling purpose, you can kind of go with a six months horizon. But I would tell you, I don't think I think we think it's a straightforward process. In terms of your question around accretion, I think that 1% figure is totally fair to use. It's obviously not a huge transaction.
Then I think, more importantly, when we talk about the top line, we're comfortable that this business is a double-digit grower over the period through different cycles. We obviously think it's a really strong strategic fit. We think there are revenue synergies that we can add to this transaction. If you think about the ways that we can accelerate and build on its standalone revenue opportunity, I'd put it into a couple of different buckets. One, there's clearly cross-selling opportunities between Tradeweb's existing client base and ICD's client base. We have a huge network of financial clients, we think, particularly internationally. ICD has a handful of sales folks internationally. Given our larger sales presence, our regulatory presence, we think that's an opportunity to actually increase and grow revenues, also in our financial services clients.
And then on the flip side, we've talked about the notion of corporate treasurers today using money market funds but increasingly becoming a more important constituency in the financial markets and more sophisticated. We think the opportunity today, they're already buying many of our products. They're using phones, banks, and a combination of other products. We think the opportunity with them to sell our existing product set also adds to the revenue growth potential. I would say we're really comfortable with that double-digit concept through the cycle. We're excited about the opportunity to pursue those revenue synergies.
Asia's a white space. So feeling really kind of to supplement your point, Sir, the Japanese and Korean corporates are really sitting on a lot of cash right now. And so that's a sort of strong feeling that we have, that there's a pretty big opportunity there as well.
Yeah. Really good point. Thank you.
Thank you. One moment for our next question. Our next question comes from Ben Budish with Barclays. Your line's open.
Hey. Good morning. And thanks for taking the question. I was wondering if you could talk a little bit more about the historical growth profile. I'm just curious how much of revenue growth has come from adding new clients versus the trends you talked about, Billy, with corporates just adding more and more cash to their overall sort of balance sheets. And then if you could comment, maybe what does the revenue growth look like most recently, 2022, 2023? Is it sort of a straight 13% or any sort of outsized pickups, slowdowns, anything like that? Thank you.
Great. Thanks for that question. When you think about what drives the revenue growth opportunity for ICD, we would say the biggest driver really is that organic growth from the existing client base. So when you think about there's new client acquisition, but the existing client base has a tendency to add increased daily balances. So think about large corporate XYZ based in the U.S. adding their international subsidiary or another business line and moving those cash balances in chunky intervals onto the platform. And so that existing ADB growth is, call it, 9% historically over the continuum. And so that's a big driver of, ultimately, the revenue base. The company continues to add new clients. And so we think, under our leadership, both of those things get accelerated because there's more opportunity for investment products driving even more balances coming onto the platform.
And then, obviously, we just talked about some of the opportunities with corporate clients. And I think one of your other questions was just kind of like, are there outsized periods of growth, right? Obviously, no business, including ours, is linear. I wish every year it was. There certainly are opportunities. And if you looked at the historical trend, periods of significant growth. One of the areas that I would highlight is, obviously, at any time you see corporates, including the largest corporates in the S&P 100 or S&P 500, hold cash and increase that cash profile, you would expect that ICD's balances and, therefore, revenue would kind of come up. And so one of those periods where the balances would dramatically increase would have been around COVID. Obviously, as you're thinking about going forward, there are different reasons. You could think about last March with the regional banking crisis.
Those are other moments. Unfortunately, when people feel stressed and there's a risk-off concept, a lot of times, corporates and other entities do hoard cash. One of the nice things, while I'll say it's on the margin as we think about diversifying Tradeweb's financial profile in our business, in a trading business, when people are generally going through a crisis, even if it's short, and having that risk-off position, this business actually is a nice counterbalance because during that same type of extreme volatility, what you might see is people increasing those cash balances dramatically. So overall, we've talked about building a durable, diversified business that's multi-asset, multi-client, multi-region. And in this way, it gives us another layer of durability and diversification as well.
Thank you. One moment for our next question. Our next question comes from Ken Worthington with JP Morgan. Your line's now open.
Hi. Good morning. ICD starts out 100% asset-based revenue. How big a priority is the buildout of a transaction revenue business leveraging some of Tradeweb's existing technology and capabilities? And if my thesis is sort of correct here, how much of ICD's revenue contribution will be transaction-based over time? And I guess the second part of this, in your credit business, there was and is this hook of treasury spotting that really accelerated the adoption of credit trading by asset managers on the Tradeweb platform. Is there a similar conceptual hook that is obvious to you today that might drive adoption of transaction services to corporate treasurers over time?
Hey, Ken. Good morning. I'll start. It's Tom. So yeah, the priority and the effort of cross-selling Tradeweb's existing suite of products into ICD will be a day-one focus. We know that a very significant percentage of these corporate treasurers and think the largest, most sophisticated ones today already trade treasuries and some trade corporates. They trade a variety of products that we offer. We will be building that connectivity. So think within 12 months, we will have an integrated front end where the clients can trade money market funds as well as the suite of Tradeweb products. We know that the clients not only trade those products, but they have an interest in trading those products through ICD Portal. So that will be a focus from day one. We'll build out over the course of the year.
As far as the question on the percentage of revenue, yes, sorry. You want to?
You want to? I just kind of put a frame on it. I think it's an important point just to clarify something. In terms of ICD's revenue, we think of it as recurring, right, basis points on an AUM or average daily balance. Technically speaking, that'll fall from a reporting perspective in our money markets line and be classified as variable because, obviously, the balances are variable. But when you're talking about transaction-based revenues, relative to an $85 million revenue base that I just talked to you about has a strong organic growth rate, obviously, the synergies that we're talking about where we sell transaction-based fees are going to be a very small portion over the next few years. But we think, ultimately, a really important channel for us to build out and a long-term growth opportunity.
Regulation has always been something, from our perspective, Ken, that has kind of pushed and changed behavior in a positive way for our business. So it's not a big leap to kind of think about what's happening with the mandate for clearing in the treasury market and get to a place where we feel like there's going to be more straightforward treasury trading activity that will be coming forward from that segment of the client base, the corporate client base. That's, for sure, part of the optionality that we like about the deal. It's a really good question. Thanks a lot, Ken.
Thank you. This concludes the question-and-answer session. Oh, now I'd like to turn it back to Billy Hult, CEO, for closing remarks.
Thanks, everyone, for dialing in on short notice. We appreciate it. Your attention on this is noted. Great questions. Thanks very much, everyone. Have a good rest of the week.
This concludes today's conference call. Thank you for participating. You may now disconnect.