Nasdaq is buying eVestment, an analytics and content provider to asset managers, for $705m in cash and debt in the latest step to expand the group’s technology, data and analytics businesses.
Nasdaq, operator of the eponymous US equities exchange, has during the past decade diversified its business as the profitability in trading equities has shrunk in the face of regulatory change and heightened competition.
Nasdaq chief executive Adena Friedman, who took the helm of the company in January, has repeatedly signalled data and technology as areas of focus and growth.
“It’s an evolution of our strategy,” she told the FT, adding that “our clients’ needs are expanding and evolving rapidly with the data available and the technology advancing”.
Investors are among Nasdaq’s clients along with corporate issuers of stock, brokers and other exchanges.
Evestment runs a database on both traditional and alternative investment strategies. A pension fund, for example, may use the service for performance and other details in selecting hedge fund investments. Evestment includes as many as 2,800 individual data points on more than 74,000 investment vehicles, which it sells to investment managers, consulting firms and pension funds.
“There are a lot of new strategies becoming available and a lot more need for data and analytics to make investment decisions,” Ms Friedman said.
Citing research from Boston Consulting, the total size of investable assets is set to increase from $71tn in 2015 to $100tn by 2020, she said.
Nasdaq will integrate eVestment with its existing mutual fund quotation business, which collects information from mutual funds, and plans to help eVestment expand. The logic of the transaction also comes in that eVestment operates by subscription, making it a source of recurring revenue for the group.
“We’ve grown this business at a 13 per cent annual growth rate since 2013, and together, we expect to produce new and expanded opportunities for our clients by combining our proprietary capabilities with Nasdaq’s core information services offerings,” said Jim Minnick, chief executive and co-founder of eVestment.
In the second quarter, market services, which include Nasdaq’s trading businesses, accounted for 37 per cent of its $602m net revenue. The remainder was 27 per cent from corporate services, such as listings, information services at 24 per cent, where eVestment will be housed, and market technology at 12 per cent.
The other acquisition by Ms Friedman this year was the purchase in July of Sybenetix, a London-based software company that uses artificial intelligence to find rogue traders.
Ms Friedman also said Nasdaq has been making internal investments in analytics and technology to expand those areas organically as well as through acquisitions.
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