The German exchange is seeking to capitalise on new upselling and cross-selling opportunities, strengthening its ESG offering and rationalise certain corporate functions.
Deutsche Börse intends to combine its existing data & analytics subsidiaries Qontigo and Institutional Shareholder Services Inc. (ISS) under one roof, after the takeover of investment manager SimCorp A/S is completed.
Upon completion of the SimCorp A/S acquisition announced today, the three subsidiaries will be grouped within a newly created investment management solutions segment - this includes the option of a potential IPO for the combined ISS/Qontigo business in the medium term.
Both transactions will bring long-term growth, sizeable and tangible synergies, and a significant increase of our recurring revenues - Theodor Weimer, CEO
The combined business will sit at the heart of the investment management ecosystem as a provider of solutions across data, index, and analytics, and offer software solutions embedded in customer workflows.
Theodor Weimer (pictured), CEO of Deutsche Börse, said: ‘Both transactions will bring long-term growth, sizeable and tangible synergies, and a significant increase of our recurring revenues.’
The transaction will significantly expand the group’s total addressable market and builds on the cooperation initiated in 2021 between SimCorp A/S and Qontigo.
In parallel, Deutsche Börse aims to accelerate the development of its Data & Analytics segment to drive additional growth and efficiencies - jointly with General Atlantic it intends to combine Qontigo and ISS, with General Atlantic becoming the sole minority shareholder of the combined Qontigo entity.
Deutsche Börse and General Atlantic have jointly reached an understanding in principle on the intended combination aiming to form a leading combined ESG, data, index, and analytics provider.
Together with SimCorp A/S, the intended Qontigo/ISS combination will transform Deutsche Börse AG’s Data & Analytics segment into an Investment Management Solutions segment.
The cooperation and partnerships within the group will lead to significant value creation generated from with total estimated run-rate EBITDA level synergies of around €90 million per year within three years of completion of the offer, with one-off cost to achieve these synergies of around €100 million, according to Weimer.
Out of these synergies, around €55 million are cost synergies, mainly identified within Deutsche Börse Group’s current Data & Analytics segment operations, and around €35 million are revenue synergies.
Market footprint
Qontigo is one of the main providers of indices to the structured products market. According to SRP data, there are 193,168 live products linked to Qontigo’s Eurostoxx 50 flagship index with an estimated outstanding volume of US$128 billion. The outstanding volume for the Eurostoxx Banks index stands at US$7.9 billion across 16,735 products.
Other top Qontigo indices featured in the structured products market include the DAX which appears across 2,7 million products with an outstanding volume of US$14.3 billion; and the DAX/XDAX which has an outstanding volume of US$951 million across 316,193 products;
SRP data also shows that over 160 indices from Qontigo’s iSTOXX range appear as the underlying of more than 1,500 live products worth and estimated US$17.8 billion of which almost 250 products worth US$4.9 billion are ESG underlyings.