Bloomberg, a leading financial data provider, has agreed to buy the fixed income indexing and risk analytics business of London-based bank Barclays in a deal worth approximately £520m. The acquisition positions Bloomberg as a major index player in the fast-growing exchange-traded funds industry.
The Index Solutions business purchased by Bloomberg incorporates the leading Barclays Aggregate family of fixed income indices.
The Barclays Risk Analytics and Index Solutions business incorporates Barclays’ benchmark fixed income indices which includes the Barclays Aggregate family of bond indices – the dominant reference for fixed income ETFs.
Jes Staley, Barclays Group CEO, said: “We are pleased to partner closely with Bloomberg upon completion of the transaction, including maintaining a co-branding arrangement on the benchmark indices for an initial term of five years.
“This transaction is further evidence of the good work we are doing in managing down our Non-Core assets so that shareholders can feel the full benefit of ownership of Barclays’ well-performing Core businesses.”
The acquisition will extend the investments that Bloomberg has made in the index business to date. Bloomberg currently participates in the index business through the Bloomberg Commodity Index, also known as BCOM (formerly the UBS-Dow Jones Commodities Index), and the Bloomberg AusBond Indices (formerly the UBS Australia Bond Index family).
“As financial markets continue to evolve, our clients need and expect the index business to evolve too,” said Michael R. Bloomberg, the founder and majority owner of Bloomberg. “Combining the market-leading Barclays indices and their superb team with our data management, analytics and distribution will provide more independence, liquidity and transparency to the marketplace, improve industry innovation and further meet the diverse needs of our global client base.”
Commenting on the acquisition, Deborah Fuhr, Managing Partner at ETFGI, an independent research and consulting firm, said: “Bloomberg’s announced acquisition of Barclays’ index business is significant news as Barclays is the dominant provider of fixed income indices.”
She added: “Based on findings in our end of November report, Barclays is currently the fourth largest provider of indices used by ETFs/ETPs listed globally ranked by assets invested in the products. The top three index providers for ETFs/ETPs – S&P Dow Jones, MSCI and FTSE Russell – are not major players in the fixed income space and are primarily known for their equity indices.”
Barclays will retain its quantitative investment strategy index business which is responsible for the development of its smart beta products such as the innovative Roubini Barclays Country Insights and the Shiller Barclays CAPE indices. The calculation and maintenance of its strategy indices will be outsourced to Bloomberg.
The transaction includes the sale of relevant intellectual property in relation to the POINT portfolio analytics tool. Barclays has agreed to continue to operate POINT for 18 months post completion in order to help clients transition to other providers, including Bloomberg’s PORT product.
Completion is subject to various conditions, including anti-trust approval, and is expected to occur by mid-2016.