NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) and S&P Dow Jones Indices exhibited have expressed interest in to drive the index businesses ahead, says a report from Reuters. This comes as an indication that the segment, which witness influx of tens of billions of dollars from investors into portfolios, would see a wave of deals in coming time.
Expanding index business top priority, in 2014
In an interview, NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) Chief Executive Robert Greifeld and S&P Dow Jones Indices chief executive Alex Matturri agreed upon the fact that bidding would be done on index businesses that come to market covering the index business run by Russell Investments and Barclays Plc.
Greifeld said that expanding the index business is the top priority in fiscal 2014, which would be done both organically and acquisitions.”We have this index engine and people don’t realize that anything MSCI can do or S&P can do, we can do right now.”
NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) launched its first index, Nasdaq Composite, in 1971, and at present there are over $1 trillion worth of assets tracked on NASDAQ indices. According to Greifeld, the company has integrated its indices with the data offerings over the last 12 months, and on Monday it launched 13,000 new indices.
Matturri notes that the S&P Dow Jones Indices would consider other assets in the index that would come up for sales. “Indexing as a whole has been on a good streak for a while as people are looking toward passive products for lower costs and good returns,” Matturri said.
Banks may also consider selling benchmark
Both NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) and S&P Dow Jones have decided to expand through acquisition amid rapid growth in the business along with increased cost and regulatory pressure, which is a positive for buyers and negative for the sellers.
According to the sources, Barclays business could be considered for sale this year along with Northwestern Mutual Life, which is considering to sell its entire Russell Investment asset management business.
Dave Nadig, chief investment officer of IndexUniverse, a San Francisco-based company that tracks ETFs said that if the owner plans to sell his index business then this is not the “bad time to do it before margins get really terrible.”
Experts note that other banks such as Bank of America, who offer benchmarks, may also feel that it is not worth owning the business.