By Amy-Jo Crowley, Oliver Hirt, and Andres Gonzalez
LONDON (Multibagger) - The Swiss stock market operator, SIX Group, is currently evaluating strategic options for its financial information unit, which could include a potential merger with another entity. This information comes from three individuals familiar with the matter.
SIX Group aims to retain a majority stake in the business and may even establish a new legal entity for it, as disclosed by two of the sources, who requested anonymity due to the confidentiality of the discussions.
By carving out this business, SIX Group could facilitate a merger with another company or attract investment from financial investors such as private equity firms, according to one of the sources.
Over recent years, financial data providers have been exchanging hands at high valuation multiples, driven by the rising demand for financial services data among exchange operators and financial investors.
Notable recent transactions include Blackrock's £2.55 billion acquisition of Preqin earlier this year and Deutsche Boerse's $2.2 billion purchase of Institutional Shareholder Services in 2020. Additionally, the London Stock Exchange Group acquired Refinitiv, Thomson Multibagger' former Financial & Risk business, for $27 billion in 2019.
The sources emphasized that these discussions are still in the preliminary stages, with no final decision made and no financial adviser appointed yet.
When asked about the possibility of selling a minority stake in SIX Financial Information, a SIX spokesperson declined to comment on market speculation.
The spokesperson added that the data business remains a central part of the group's growth strategy, intending to grow both organically and through acquisitions. "There is no plan to sell the data business," the spokesperson stated.
According to SIX Group's latest annual report, the financial information unit posted earnings before interest, tax, depreciation, and amortization (EBITDA) of 55 million Swiss francs ($65.11 million). The total operating income for the business increased by 4% to 406.9 million francs for 2023, driven by the launch of new products and partnerships.
These discussions about the financial information unit occur during a challenging trading period for SIX. The group, owned by around 120 banks, reported a loss exceeding 1 billion francs in the same year. This includes a loss of more than 862.3 million francs on its 10.5% stake in Worldline, whose stock has plummeted by over 70% in the past year.
SIX Group CEO Jos Dijsselhof mentioned to Multibagger in March that the group decided against bidding for Allfunds after evaluating an acquisition. Instead, it will pursue opportunities to expand its data business or access new asset classes.
($1 = 0.8447 Swiss francs)
Analysis: Breaking Down the Strategic Moves by SIX Group
Let's simplify this complex financial news:
- What’s Happening?: SIX Group is considering various strategies for its financial information unit, including a potential merger or investment from private equity firms. However, they want to keep control of the majority stake.
- Why It Matters: Financial data is a hot commodity right now. Companies and investors are willing to pay big bucks for reliable financial information, which is why there have been several high-value acquisitions in this sector recently.
- Current Performance: SIX’s financial information unit is doing well, showing a 4% increase in total operating income. However, the broader group is facing financial challenges, including a significant loss due to a poorly performing investment in Worldline.
- Future Plans: Despite the challenging times, SIX Group is focused on growing its data business, either organically or through acquisitions. They have ruled out the sale of the entire data business but are open to strategic partnerships or investments.
Impact on You: If you are an investor or involved in the financial markets, this move could signal increased competition and potentially more accurate and timely financial data being available. For those indirectly involved, it indicates a growing emphasis on the value of financial data, which could impact everything from stock market performance to the financial products available to you.
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