Bond Platform Trumid Tops $1 Billion Valuation in Funding Round

(Bloomberg) -- Funds and accounts managed by T. Rowe Price Associates Inc. and BlackRock Inc. are among investors that contributed $200 million to Trumid Financial LLC in its latest fundraising round, more than doubling the bond trading platform’s valuation to over $1 billion since last May.

TPG also bought into the round, which was led by growth equity firm Dragoneer Investment Group LLC, Trumid said in a statement Tuesday. It plans to use the money to expand its products to include emerging markets and reach into new geographies like Asia.

The valuation not only further solidifies Trumid, which has been working its way up to compete with MarketAxess Holdings Inc. and Tradeweb Markets Inc., but also endorses further electronification of the corporate bond market by some of the world’s largest asset managers. Nearly three-quarters of the market still trades by phone, one of the last corners of finance to fully embrace the digital age.

“Working from home has really highlighted the importance of technology for the future of fixed income -- not only trading, but the entire investment process,” said Dwayne Middleton, global head of fixed income trading at T. Rowe Price. “We’re looking for tech partners that can provide solutions in a multitude of asset classes.”

Trumid has capitalized on what’s been a record period for corporate bond trading amid the pandemic-fueled volatility, posting 500% growth in volume this year. Much of that comes from its attributed trading protocol, in which each counterparty of a transaction is disclosed. That’s been growing through a partnership with Citigroup Inc. -- 14 dealers are currently streaming their liquidity, and Trumid expects that to grow to 20 by year-end, according to the platform’s President Mike Sobel.

The six-year-old company has leveraged other relationships with Wall Street to make trading electronically easier and streamline existing workflows. It’s collaborating with Barclays Plc to help salespeople generate more transactions and has partnered with Bank of America Corp. Trumid is also working with Nasdaq to simplify U.S. Treasury hedging for corporate bonds, according to a statement last week.

“It’s time to expand,” Sobel said in an interview. “This is very much about putting ourselves in a position to invest in growth.”

The platform counts more than 500 buy- and sell-side institutions among its clients, and saw a 25% growth in daily users between the first and second quarters of 2020, Sobel said. Its footprint of securities has also broadened considerably, with the number of bonds traded each day up almost 250% from a year ago, he said.

Trumid has done several fundraises in the past, with the most recent coming in May 2019 and valuing the firm at just under $500 million. That was led by Hillhouse Capital Management Ltd., which also participated in this round.

TPG’s investment comes after years of monitoring the platform’s growth, including recent discussions with active and prospective Trumid users, according to principal John Flynn. The private equity firm’s involvement is also supported by co-Chief Executive Officer Jon Winkelried, who helped lead the fixed income, currency and commodities division at Goldman Sachs Group Inc. before becoming the bank’s co-chief operating officer.

“We are convinced that bond trading is on the verge of a dramatic shift towards electronic trading, which will drive greater liquidity and efficiency for buy-side and sell-side traders,” Flynn said.

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