The owner of the New York Stock Exchange is expanding its fast-growing data services business by acquiring Interactive Data Corp. in a deal worth $5.2 billion.

Intercontinental Exchange (ICE) beat out Nasdaq and the financial data publisher Markit in a highly contested auction for IDC. It has agreed to pay IDC’s private equity owners, Silver Lake and Warburg Pincus, $3.65 billion in cash and $1.55 billion in common stock.

“The deal will throw ICE … deep into the market for pricing illiquid bonds,” The Financial Times said, noting that new global banking and markets regulation “is set to usher in more electronic quote-driven trading and clearing in fixed income markets in America and Europe.”

IDC evaluates prices for 2.7 million financial securities every day, including 46,000 corporate debt issues, 1.1 million U.S. municipal bonds and 45,000 high-yield bonds. ICE’s purchase will make it the third-largest data provider behind Bloomberg and Thomson Reuters, according to the consulting firm Burton-Taylor.

ICE “is “trying to provide extensive tools to financial institutions so they can price some of these over-the-counter products that aren’t easy to value.,” Rich Repetto, an analyst at Sandler O’Neill & Partners, told Bloomberg.

Silver Lake and Warburg Pincus paid about $3.4 billion to take IDC private in 2010. The investment firms have been weighing a sale of the company as well as an initial public offering.

According to the prospectus for an IPO, IDC’s sales reached $939.2 million last year, up 8% from 2011. The company’s “bread and butter” is the bond pricing where “a roomful of bond analysts” pore over securities information to complement their algorithmic models, said Kevin McPartland, an analyst at Greenwich Associates.

Data services is ICE’s fastest-growing business, with revenues increasing from about $100 million in 2010 to an expected $700 million this year, according to UBS.

“With IDC as the cornerstone in the next phase of extending our services, we will build on our track record of solid execution on integration and innovation by focusing on the needs of our customers in the evolving data services marketplace,” Jeff Sprecher, chief executive of ICE, said in a news release.

, , , , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *