SGX Eyes $2.7 Trillion Factor-Investing Market With New Deal
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Singapore Exchange Ltd. will acquire a majority stake in Scientific Beta Pte., an index provider for products enabling investors to track market themes, an increasingly significant trend in global fund management.
The target company -- incorporated in Singapore, with offices in France, the U.K. and the U.S. -- specializes in factor-based strategies, a market that’s set to reach $2.7 trillion this year, the exchange said. The move comes as passive strategies are gaining greater popularity over actively-managed approaches.
SGX will buy 93% of Scientific Beta for 186 million euros ($206 million) in cash. Assets replicating Scientific Beta’s smart-beta indexes have risen more than 10-fold in four years and now total $55 billion, SGX said.
The growth of passive investing is a trend, and SGX is building up its index business, Chief Executive Officer Loh Boon Chye said at a briefing. The stock was little changed as of 3:32 p.m. local time, compared with a 0.2% rise in the benchmark Straits Times Index.
The purchase is meant to boost the trading venue’s data, connectivity and indexes business, which it aims to double in the next five years.
Exchanges around the world are making acquisitions to boost their product offerings. London Stock Exchange Group Plc’s $27 billion purchase of data firm Refinitiv is expected to generate about 70% of sales from data. Deutsche Boerse AG, too, is on the lookout to snap up data providers and trading platforms.
The Singapore exchange has made other investments in the past year, buying stakes in foreign-exchange platform BidFX Systems Ltd. and Smartkarma Holdings Pte., a financial technology company with an online investment research platform.
In addition to the Scientific Beta acquisition, SGX announced quarterly results. Net income rose 3% for the three months through December, even as stock-derivatives revenue fell 5%.
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