Digging for data: deals mine rich information seam

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The financial data rush intensified over the last few weeks with three landmark takeover deals underscoring a spike in demand for the precious analytical raw material.

Last week the London Stock Exchange (LSE) was the latest to hit paydirt with the purchase of fixed income environmental, social and governance (ESG) data firm, Beyond Ratings.

Beyond Ratings would reside in the LSE Information Services Division alongside the benchmark maker FTSE Russell with a new ESG fixed income index in the pipeline following the deal.

In a release, LSE says: “Client demand for research-driven cross-asset solutions to integrate sustainability considerations into investment strategies, risk management, and stewardship approaches continues to grow.

“Leveraging Beyond Ratings’ innovative research and sustainable investment (SI) expertise, we believe that this acquisition will help us to deliver additional choice, greater innovation and added value for our clients.”

Just days before the announcement, the ASX-listed financial software provider IRESS shelled out over $66 million for data and trading business, QuantHouse. QuantHouse describes itself as a “global independent provider of high-performance API-based market data and algorithmic trading services”.

The Paris-headquartered group provides over “145 data feeds from exchanges and other data providers” to clients in Europe, North America and Asia, according to a release.

Andrew Walsh, IRESS chief, said QuantHouse would boost the ability of the Australian-founded business to supply “accurate, timely and cost-effective market data” to its growing global client base.

“QuantHouse is highly complementary and strategically aligned to IRESS’ existing and future activities and to its international offering, including IRESS’ increasing focus on data. The acquisition will further strengthen IRESS’ international market data business and provide opportunities to achieve cost synergies and scale,” Walsh said in the statement.

“Importantly, the acquisition will expand IRESS’ offering to clients globally. In particular, the acquisition will allow IRESS to provide clients with real-time access to additional services, including international exchanges, with global MSCI coverage increasing from 52% to 75%. It will also meet client demand for increased channels for data beyond desktops.”

QuantHouse founder, Pierre Feligioni, would continue to run the business following the IRESS takeover.

IRESS has a significant presence in NZ with clients across investment management, stock broking and financial planning (with its XPlan system). Walsh founded XPlan, remaining with IRESS after selling the financial planning software business to it in 2003.

He was promoted from IRESS head of wealth management to CEO in 2009.

In another recent number-crunching deal, Morningstar took out DBRS, the world’s fourth largest credit rating agency, for US$669 million

The move would expand the researcher’s “global asset class coverage and provide an enhanced platform for providing investors with leading fixed-income analysis and research”, Morningstar said in a release.

DBRS, which rates about 50,000 fixed income securities from roughly 2,500 issuers, has a strong presence in Canada but also boasts clients in Europe and the US.

Morningstar chief, Kunal Kapoor, said the Morningstar tie-up with DBRS could “elevate the industry with the world’s first fintech ratings agency backed by state-of-the-art models, modern technology, and expert research teams that issuers and investors can count on to deliver transparent and independent ratings”.

David Chaplin, Investment News NZ

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