The Cloud

Nasdaq Buys Analytics Provider for $705M

The acquisition of eVestment will boost Nasdaq's market technology business as it continues to diversify from equities trading.
Matthew HellerSeptember 6, 2017

Continuing its shift away from equities trading, Nasdaq Inc. has agreed to acquire investment analytics provider eVestment Alliance for $705 million.

Evestment, which provides cloud-based services to help investors monitor market trends and make investment decisions, is expected to boost Nasdaq’s business of selling market technology to trading firms, exchanges and clearing houses around the world.

Revenue from that business rose 7.5% in the second quarter ended June and accounted for nearly 24% of overall revenue. Non-transaction-related businesses generate a steadier income flow than trading fees.

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“The investment management community is relying increasingly on independent data and advanced analytics to drive their key business decisions, including asset allocation and investment choices,” Nasdaq CEO Adena Friedman said in a news release. “eVestment is the definitive source from asset managers of critical fund-level and investment-level data and analytics to enable asset owners to make informed decisions.”

She added that the deal will “further expand our buy side relationships, accelerate our growth opportunities, and advance our objectives to deliver proprietary analytics to our clients.”

As Reuters reports, Friedman has been a vocal advocate for investing more in innovative technologies such as cognitive computing since she took over as CEO in January. She also oversaw Nasdaq’s July purchase of London-based startup Sybenetix.

The company’s diversification has enabled it to become less reliant on trading equities as the profitability of that business has profitability in trading equities has shrunk with regulatory change and heightened competition. “Nasdaq has been diversifying from pure trading for a period of time now and it continues that focus [with eVestment],” Richard Repetto, an analyst at Sandler O‘Neill & Partners, said.

eVestment’s database includes as many as 2,800 individual data points on more than 74,000 investment vehicles. It serves more than 2,000 clients, including Morgan Stanley, Google parent Alphabet, and BlackRock.

“We’ve grown this business at a 12% annual growth rate since 2013, and we expect to produce new and expanded opportunities for our clients by combining our proprietary capabilities with Nasdaq’s core information services offerings,” CEO Jim Minnick said.