Senior financial analysts at Tochigi Ontario Holdings have today commented on the private equity owners of the financial market data provider company, Interactive Data Corporation, priming for a sale of their investment. The deal is expected to be valued at $5.5 billion, including debt.
"Warburg Pincus and Silver Lake Partners have already initiated the early stages of a dual-track process, which would either trigger a US floatation of IDC or a sale. The firms are already making arrangements with banks to manage the listing," commented Michael Walker, Director of Corporate Equities at Tochigi Ontario Holdings.
If they consider auctioning IDC, it may attract financial data companies or other judicious bidders like Thomas Reuters, Standard & Poor's owner, McGraw Hill Financial, and others.
On the contrary, the possible deal's size may see some bidders withdraw as IDC's value is massive to absorb for its competitors. This may make the listing more practical for the owners. Both Silver Lake and Warburg denied making any comments over this.
Silver Lake and Warburg had acquired IDC for $3.4 billion in 2010. IDC was then owned and run by the owner of Financial Times, Pearson. For holding a 61% stake in the business, Pearson had received $2 billion.
Along with many services that it provides to its customers, IDC also evaluates prices for around 2.7 million financial securities, including 1.1 million US municipal bonds, 46,000 corporate debt issues, and 45,000 high-yield bonds; every day.
In 2014, it revealed $362m in adjusted earnings before interest, tax, depreciation, and amortization, and an increase of 3% from the previous year. Revenues amplified 3.7% to $939m. At the end of last year, IDC had $320 million cash and $2.2 billion outstanding debt.
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| Tochigi Ontario Holdings comments on IDC's private equity owners exploring $5.5 billion sale or IPO |
"Last year, the global spending on financial analysis and data increased to 4% to $26.5 billion. Thomas Reuters and Bloomberg LP are overshadowing the market with 26% and 32% sales, respectively. With a revenue of $945 million, FactSet is the third-largest player in the industry," said Jonathan Turner, Head of Corporate Trading at Tochigi Ontario Holdings.
Another financial data industry player who has shown potential is Dealmaking after acquiring the Wood Mackenzie for $2.8 billion at the beginning of this year.
Recent listings have been impacted by an interest in the financial data sector. Financial data provider Markit has raised $1.3 billion in June from the New York IPO last year. Since then, shares of Markit have surged to 7.8%, and a 4.8 billion market capitalization.