London Stock Exchange Group (LSEG) has reached an agreement with Citigroup Inc (Citi) to acquire The Yield Book and Citi Fixed Income Indices for US$685m (£535m). This fixed income analytics platform and index business comprises a family of fixed income indices.
The transaction is expected to close in the second half of 2017. The LSEG says the acquisition represents a significant opportunity to enhance the data and analytics capabilities of its Information Services division (ISD) and its FTSE Russell franchise.
In particular, it will bring an increase in benchmark assets under management to around $15 trillion, enhanced analytics capabilities and a broader multi-asset customer servicing capability.
The Acquisition enables FTSE Russell
- To offer a comprehensive fixed income index family
- To offer broad and deep fixed income analytics to customers
- To offer a recognised global brand for both equity and fixed income in North America, Asia and Europe
LSEG says the acquisition reflects its ongoing commitment to expanding the capabilities of its ISD, and follows the acquisition of the Russell indices business in 2014 and Mergent Inc in 2016. The Yield Book also helps to strengthen LSEG’s presence in the United States.
In the year to 31 December 2016, the combined business generated revenue of $107m and earnings before interest, tax, depreciation and amortisation of $46m (implying an enterprise value 2016 EBITDA of 14.9x).
LSEG expects to achieve revenue synergies of $30m (ie cut costs by cutting staff numbers) over the first three years post-completion through investment in new product opportunities and increased index adoption.
Yield Book serves c350 institutions globally including
- Central banks
- Insurance companies
- Pension funds
- Hedge funds
- Investment management firms
Additionally, it expects to achieve cost synergies of $18 million over the same period through operational efficiencies to align FTSE Russell product strategy with The Yield Book, with further potential upside in the subsequent two years.