Deutsche Börse, a German stock exchange operator, has agreed to acquire a stake of around 80% in Institutional Shareholder Services (ISS) from private equity firm Genstar Capital for $1.8bn.
ISS provides corporate governance and responsible investment solutions, market intelligence and fund services and events and also editorial content.
Founded in 1985, the company caters to institutional investors and corporations across the world. Currently, ISS has more than 2,000 employees working across more than 30 offices in 15 countries serving over 4,000 clients.
The deal values 100% of the company at $2.27bn.
Genstar Capital and the company’s current management will continue to hold a stake of around 20%.
According to Deutsche Börse, its combination with ISS provides an excellent base to fully realise opportunities for future growth in environmental, social and governance (ESG) based investing across the world.
Furthermore, ISS’ ESG and data expertise is expected to help Deutsche Börse become one of the top global ESG data players.
Deutsche Börse CEO Theodor Weimer said: “Together, ISS and Deutsche Börse have complementary ingredients to become one of the globally leading ESG players of the future. We have been deeply impressed by the culture and the leadership team of ISS.
“We look forward to partnering with ISS and working together to support the company’s continued business growth and jointly drive forward Deutsche Börse’s strategy.”
Deutsche Börse also said that ISS will bring unique access to the buyside with over 2,000 asset managers. Besides, ISS’ strong presence in the US complements well with the German stock exchange’s position in Europe.
For the current year, ISS is estimated to record net revenue of over $280m.
The deal is expected to advance Deutsche Börse’s pre-trade growth strategy. It also complements the German firm’s creation of Qontigo in 2019 by combining the analytics capabilities of Axioma with its existing STOXX and DAX index businesses.
ISS president and CEO Gary Retelny said: “Deutsche Börse’s market-leading brands and solutions align very well with ISS’ offerings within our governance, ESG, index and market intelligence businesses.
“We believe that the potential combination of ISS’ ESG data and STOXX’ indices will offer clients new, powerful and innovative solutions with unique data sets that meet their evolving investment needs.”
The deal, which is subject to regulatory approvals and customary closing conditions, is expected to close in the first half of next year.
In September 2020, Deutsche Börse signed a deal to acquire a majority stake in Quantitative Brokers, an analytics provider for financial markets.
