Deutsche Börse To Add To Analytics Business02.18.2020
Deutsche Börse, the German exchange group, said it wants to make acquisitions that can add capabilities to its analytics and index division which was formed last year.
In September last year Deutsche Börse created Qontigo as a new company through combining index businesses Stoxx and Dax with Axioma, a company it had acquired in 2019 and which provides tools for portfolio construction and risk analytics.
Deutsche Börse said Qontigo can address trends that are reshaping investment management including the growth of passive investing and smart beta and the modernisation of the investment management technology infrastructure.
Gregor Pottmeyer, chief financial officer of Deutsche Börse, said in a results call this morning that Qontigo had €20m ($21.6m) in net revenue in the fourth quarter of last year, which exceeded expectations.
“Net revenues in the analytics business grew 20% in the fourth quarter and 10% in the index business, due to the rise in passives,” he added.
In addition Qontigo last month launched the Stoxx Factor Index suite, which uses Axioma Factor Risk Models to provide control over unintended factor exposures and to verify performance drivers.
Holger Wohlenberg, chief business officer of Qontigo, said in a statement: “The launch of the Stoxx factor index suite truly brings together the analytic and indexing expertise of Qontigo in a clear demonstration of the value of this powerful combination.”
#2019Results: the first months as #Qontigo were a great success. Find out more about how we and @DeutscheBoerse did in 2019 as well as an outlook for 2020. https://t.co/mm4NAVExLN #db1pc pic.twitter.com/9VnYG7dpdv
— STOXX Ltd. (@stoxx) February 18, 2020
As part of the formation of Qontigo last year, Deutsche Börse entered into a strategic partnership with General Atlantic. The private equity firm invested $720m (€666m) in Qontigo, which partly financed the acquisition of Axioma.
Gabriel Caillaux, managing director and head of EMEA at General Atlantic, said in a statement at the time: “We have a strong conviction that Qontigo can deliver a fully integrated joint buy-side client proposition that builds upon the indexing and portfolio/risk analytics legacies of the Stoxx and Axioma businesses.”
Pottmeyer said General Atlantic provides valuable input due to their experience of the US market.
“It is good to have an external benchmark,” he added. “General Atlantic also provide good input on mergers and acquisitions as we intend to increase our capabilities in analytics.”
Theodor Weimer, chief executive of Deutsche Börse, said on the call that the group achieved very solid growth in 2019. The firm will continue to consistently pursue its ‘Roadmap 2020’ strategy during the current financial year and anticipates adjusted net profit growth of at least 5% to around €1.2bn.
Weimer added: “Furthermore, the focus on external growth has come to fruition during 2019 – with the acquisitions of Axioma and UBS Fondcenter.”
Last month Clearstream, Deutsche Börse Group’s post-trade services provider, and UBS agreed on a partnership in investment fund services. Clearstream is acquiring 51% of Zurich-based fund distribution platform Fondcenter from UBS for CHF 389m ($396m).
The newly-combined distribution services will have more than $230bn in assets under administration.
📢 #GrowingTheFamily We are delighted to announce that we will acquire a majority stake in @UBS’s fund distribution platform Fondcenter, integrating it into #Clearstream’s investment #fund services business. https://t.co/1bhFHeDpZl pic.twitter.com/o9iYd8p7ta
— Clearstream (@Clearstream) January 21, 2020
Stephan Leithner, chairman of Clearstream, said in a statement: “Our distributor customers will benefit from extended global fund provider coverage, while asset manager clients will have direct access to UBS GWM premier distribution network as well as access to Clearstream distribution reach. We expect to generate significant synergies from combining our fund distribution businesses.”
Weimer continued on the call that the acquisition of Fondcenter was strategically important to strengthen funds distribution and make the business more scalable. “In the second half of 2020 we expect €60m in net revenue from funds distribution with a 70% EBITDA margin,” he added.
The chief executive said Eurex (financial derivatives) and IFS (investment fund services) segments were the primary contributors to structural growth.
New products as growth drivers: 2019 was a good year for #Eurex. Get all of @DeutscheBoerse’s 2019 results as well as an outlook for 2020 here: https://t.co/HL7u3rI3bx #db1pc pic.twitter.com/1B9TJGlv3v
— Eurex (@EurexGroup) February 18, 2020
“In addition to over-the-counter clearing, structural growth of net revenue in the Eurex segment was mainly a result of new products and pricing models, whilst activities in the IFS segment also rose thanks to new client acquisition,” Weimer added.
Customers can make more informed trading decisions and generate new alpha.
SEC Commissioner Jaime Lizárraga discussed the regulator's proposed ESG disclosures.
State Street Global Advisors will manage active systematic fixed income strategies with Barclays QPS' data.
Asset managers will have a single service for SFDR reporting.
Risk management practices across the crypto ecosystem stress are being tested.