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$44bn mega-deal proves data is big business | Business News

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London Stock Exchange

Asked to name the most valuable commodity, most people would probably plump for gold or another precious metal, such as platinum.

Or, if they were looking at the size of an entire market, they might cite oil.

For many professionals in financial markets, though, the value of gold and oil pale into insignificance alongside data.

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The owner of the London Stock Exchange is also part of the race to supply data

That has been underlined by news today that S&P Global, the financial data provider, is buying its rival IHS Markit for $44bn (£32bn).

It is the biggest takeover so far in 2020 – a year that has itself broken records for mergers and acquisitions activity.

The deal highlights the increasing value of data and the fierce race to supply more data to participants in financial markets that are themselves becoming increasingly automated.

That race has seen the London Stock Exchange announce the blockbuster $27bn (£20bn) takeover of Refinitiv, the former financial information and risk arm of Thomson Reuters, which is navigating its way through the regulatory process.

It has also seen the $11bn (£8bn) takeover of Ellie Mae, a technology platform for the mortgage finance industry, by Intercontinental Exchange, the owner of the New York Stock Exchange, which was completed in September.

Slightly further back, there was Bloomberg’s £520m purchase of Barclays’ index benchmarking arm in 2016, while the previous year saw Verisk Analytics pay £1.9bn for the energy data provider Wood Mackenzie.

Wall Street
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S&P is behind America’s most important stock index

Bringing together S&P Global with IHS Markit will, in the words of the two, create “a combined business with increased scale and world-class products in core market segments”.

They went on to say that “the combined company will have balanced earnings across major industry segments and a resilient portfolio, providing additional financial flexibility to pursue value-creating opportunities”.

Both businesses are big suppliers of data to financial centres such as Wall Street and the City.

S&P Global is best known as one of the world’s biggest credit ratings agencies but it is also a major provider of indices, notably the S&P 500, America’s most important stock index.

IHS Markit is itself the creation of a merger in 2016 between two businesses: US-based IHS and UK-based Markit.

There are a couple of factors that have driven this activity.

The first is the success of Bloomberg, which started out as a provider of specialist financial data to participants in the bond market, but which now supplies financial data, analysis and news to 325,000 subscribers around the world – each paying $2,000 (£1,500) per month to receive this via a terminal.

The sheer profitability of Bloomberg over many decades has made other data providers think more deeply about how they can sell financial information to market players.

Traders looks at financial information on computer screens on the IG Index trading floor in London, Britain February 6, 2018.
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Data providers are thinking more deeply about how they can sell financial information to market players

It has also encouraged some data providers to think about combinations in order to compete more effectively with Bloomberg’s financial might.

Stock exchange owners like the LSE and ICE have been eager participants in this activity as they seek to diversify their revenues.

One battleground has been running investment benchmarks such as stock indices: S&P is the world’s biggest players in this field and especially since it formed S&P Dow Jones Indices, a joint venture with CME Group, the owner of some of the world’s biggest commodity exchanges and News Corp, the owner of the Wall Street Journal and Dow Jones.

These have become especially money-spinning as investors increasingly switch from leaving their savings with ‘active’ managers, who select stocks for the portfolios they run and ‘passive’ managers, which simply track the performance of a benchmark or an index.

As more money moves into the index trackers, the index providers have grown in importance, while reshuffles of index constituents are increasingly resulting in a degree of upheaval in markets.

S&P is said to have approached IHS Markit about a merger in September.

The enlarged company will be roughly two-thirds owned by S&P’s shareholders and the remaining third owned by shareholders in IHS Markit.

An attraction from the merger, from S&P’s point of view, is that it reduces its reliance on the credit ratings sector.

Markit CEO Lance Uggla celebrates at the NASDAQ MarketSite in Times Square during the launch of the initial public offering (IPO) for Markit on June 19, 2014 in New York City.
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Lance Uggla founded Markit in 2003

That currently accounts for 47% of S&P Global’s current turnover but will make up just 30% of annual sales at the combined business.

One of the biggest individual shareholders in that business will be Lance Uggla, the chief executive of IHS Markit, who founded Markit in 2003.

Canadian-born Mr Uggla, 58, was a former credit derivatives trader with Toronto Dominion Bank in London who spotted an opportunity to bring clarity in pricing to the fast growing market in credit default swaps – a type of insurance taken out by bond investors against the issuers of the bonds they buy going bust.

Markit began its days in a converted barn in St Albans, Hertfordshire, in 2003 with just five employees.

The barn was so prone to flooding that the group had to put their server on a chair.

From those humble beginnings, IHS Markit now has more than 15,000 employees around the world, including 3,000 at an office on Ropemaker Street near Moorgate in the City.

Markit floated on the stock market in June 2014 with a $4.28bn (£3.16bn) price tag that made multi-millionaires out of dozens of employees.

The merger with IHS followed and Mr Uggla, who now has British citizenship as well as a season ticket at Arsenal, became chief executive at the end of 2017.

The S&P Global logo is displayed on its offices in the financial district in New York City, U.S., December 13, 2018
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S&P is said to have approached IHS Markit about a merger in September

Mr Uggla, the son of a Vancouver sawmill manager, currently owns shares in IHS Markit worth approximately $119m (£88m) but is thought to be worth several hundred million pounds more than that after selling down some of his shareholding when Markit floated six years ago.

He is to stay on as a special adviser to the enlarged company for a year before stepping away.

That, of course, is assuming the deal goes ahead in this form.

A counter bid from ICE is possible.

And so, too, is a drawn-out competition enquiry.

Regulators are concerned about the power of an increasingly small pool of data providers that are effectively becoming gatekeepers to particular financial markets.

It could be a while yet before this mega-deal completes.

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EDF ignites stock market spark with plan for Pod Point float | Business News

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EDF ignites stock market spark with plan for Pod Point float | Business News

EDF, the French state-backed energy giant, is drawing up secret plans for a stock market flotation of one of Britain’s biggest providers of electric vehicle charging infrastructure amid soaring demand from motorists.

Sky News has learnt that EDF, which bought a controlling stake in Pod Point less than a year ago, has instructed investment bankers at Barclays to begin working on the timing and structure of a public listing.

City sources said this weekend that an initial public offering (IPO) could value Pod Point at many hundreds of millions of pounds, crystallising a big paper fortune for Erik Fairbairn, the company’s founder.

EDF’s plans are at an early stage, but underline the burgeoning interest in capitalising on the accelerating shift to electric cars, with the government now having established a 2030 target for banning the sale of new petrol and diesel vehicles, and 2035 for phasing out hybrids.

Sources said that EDF would be likely to retain a large stake in Pod Point after an IPO as it seeks to meet its target of becoming the leading energy company for electric mobility in the UK, France, Belgium and Italy.

Pod Point says it has powered more than 459m miles of electric driving, and has a public network of nearly 4000 charging bays.

According to recent parliamentary research, nearly 29,000 charging points will be required across Britain by 2030 to meet demand, with the number of public chargers for top-up charging needing a tenfold increase by the end of the decade from 2016 levels.

The Society of Motor Manufacturers and Traders said recently that 2020 had been the best ever year for electric cars in the UK, with the market share of battery and plug-in hybrid vehicles reaching 10.7%.

“Investment in charging infrastructure and battery gigafactories [is] now essential to reboot industry and meet post-Brexit electrification challenge,” the SMMT said..

Pod Point was backed by a group of venture capital funds and other early-stage investors prior to EDF announcing the takeover of the company last February.

As part of that transaction, Legal & General (L&G), the FTSE-100 insurance and pensions giant, retained a 23% stake in the technology company.

By drawing up plans to float, Pod Point will join an unprecedented queue of promising British tech companies which have set their sights on a London listing as investors embrace a wave of coronavirus winners.

In a statement, a Pod Point spokeswoman said: “We are of course very pleased that the market for electric vehicles has continued to grow so strongly over the course of a very challenging year.

“Unfortunately, we are unable to comment on questions relating to investment as these enquiries are handled directly by our parent company EDF.”

EDF declined to comment on the possibility of an IPO.

Its UK country manager, Simone Rossi, said at the time of the takeover of Pod Point: “Electric vehicles will be crucial in reducing the UK’s carbon emissions and fighting climate change.

“With the addition of charge points, we can help our customers to reduce their carbon footprints and benefit from lower fuel costs by going electric.

“The additional electricity demand from EVs will require urgent investment in low carbon generation from renewables and nuclear.”

Pod Point, which was founded in 2009 by Mr Fairbairn, competes with rivals such as Chargemaster, which is now a subsidiary of BP.

It has partnerships with Tesco and Lidl, with charging points installed at their supermarket car parks, and counts British Land, Gatwick Airport and Pepsico among its other corporate partners.

EDF data published last year suggested that a low carbon grid, featuring new renewables and nuclear, and switching the 32million petrol and diesel cars on UK roads to electric, would avoid 65m tonnes of CO2 emissions, and shrink Britain’s overall carbon footprint by more than 10%.EDF ignites stock market spark with plan for Pod Point float

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Barclays weigh £3bn float of online retailer Very Group | Business News

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Sir David Barclay (l) and his twin brother Sir Frederick after receiving their knighthoods at Buckingham Palace in 2000

The proprietors of The Daily Telegraph have begun exploring plans for a £3bn-plus flotation of Very Group, their booming online retail operation.

Sky News has learnt that the Barclay family is at the early stages of examining whether to take Very to the public markets in order to capitalise on exploding investor interest in digitally led retailers.

Insiders said that the family had started evaluating such a move prior to the unexpected death this week of Sir David Barclay, who with his twin brother Sir Frederick had built one of Britain’s biggest private business empires.

A decision about an initial public offering (IPO) of Very Group is not thought to be imminent, but sources close to the family acknowledged that it was under more serious contemplation than at any previous point.

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The family had started evaluating the move before the unexpected death of Sir David Barclay (l), seen here with his twin brother, Sir Frederick

It was unclear on Friday evening whether Very’s board had formally appointed bankers to help advise on a potential listing plan, although one source said that UBS – which has advised the company in the past – was likely to be involved.

If the owners did decide to pursue a public listing, it would expose a Barclay-owned business to the glare of public equity markets for the first time, marking a significant departure for a family which has – despite the profile of the assets it owns – always sought to protect its privacy.

In addition to the Telegraph titles, the Barclays also own the logistics business Yodel.

Last year, the family sold London’s Ritz hotel following a bitter dispute between the twins over its valuation.

A legal battle involving allegations of corporate espionage may yet continue despite Sir David’s death.

Last year’s Sunday Times Rich List estimated that the brothers had amassed a combined fortune of about £7bn.

A flotation of Very Group would be a logical step for a business which, like many online retailers, has been among the big beneficiaries of the coronavirus pandemic.

While high street chains have invariably been struggling to stay afloat, Very reported this week what it described as a record-breaking Christmas and Black Friday trading performance.

The company is run by Henry Birch, a former boss of the casino operator Rank Group, and chaired by Aidan, one of Sir David’s sons.

In a trading update published this week, Mr Birch said the Christmas trading period had “started early at Very and our committed team worked tirelessly to deliver for our customers”.

“Because we sell everything our customers could possibly want except food, are online only and offer a range of payment options, we were perfectly placed to help a record number of people make the most of the festive period.”

The company said it had seen more than 500,000 new customers use the Very Group platform, with 139m website visits – a year-on-year rise of nearly 50%.

“Our record-breaking performance was supported by our new fulfilment centre, which processed 3.9m orders during peak; an incredible achievement for a facility that only launched in March this year, when the first national lockdown was announced,” Mr Birch added.

“While the economic picture remains unpredictable, we have strong momentum as we begin the year.”

Very Group last explored the possibility of bringing in external investors in 2017, when it held talks with a number of large private equity firms.

At the time, it sought a roughly-£3bn valuation for the business, which at the time was called Shop Direct, but ultimately decided not to pursue a sale.

A Very Group spokesman declined to comment on Friday.

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ITV picks firm to screen successors to chairman Bazalgette | Business News

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ITV picks firm to screen successors to chairman Bazalgette | Business News

ITV is kicking off a search for a new chairman as Sir Peter Bazalgette prepares to step down next year after almost a decade on the broadcaster’s board.

Sky News has learnt that ITV‘s nominations committee, led by the former Jupiter Fund Management boss Edward Bonham Carter, has appointed Spencer Stuart to oversee the search.

Sir Peter, who has chaired the commercial television group since 2016, is not expected to leave until his term expires in May 2022.

In total, he will have served for nine years on ITV’s board, having been a non-executive director for three years prior to replacing Archie Norman.

Sir Peter, a former chief creative officer at the TV production company Endemol, is a respected figure both at ITV and in the wider broadcasting industry.

A number of the company’s leading shareholders are said to be disappointed that he has effectively been “timed out” by the corporate governance code, which stipulates that chairs are no longer deemed independent after nine years in total on a listed company’s board.

His successor as chair will inherit a company that, like many others, is grappling with rapid changes convulsing the media landscape.

ITV’s stock price has been hit by the coronavirus pandemic, with the company’s chief executive, Dame Carolyn McCall, revealing last summer that advertising revenue had been hit by the sharpest fall in its history.

During the last 12 months, shares in ITV have fallen by nearly a quarter, giving the company a market value of £4.37bn.

ITV declined to comment on the search for a new chairman.

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