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The Refinitiv Deal: What It Means For Wealth Management

Tom Burroughes

9 August 2019

Tech firms that serve banks are going through the same M&A upheavals that the institutions they cater for have experienced since before the 2008 financial crisis. The recent London Stock Exchange Group’s $27 billion purchase of data provider . (FNZ offers outsourced services such as those allied to the digital user experience, client, account and portfolio management and back-office trade execution, settlement and investment administration. JHC is known for services such as its Figaro wealth platform for account administration, trading, reg. compliance, and Neon, a dashboard to monitor portfolios, analyse risk and check suitability.) In 2018 FNZ also agreed to acquire German investment platform ebase from Commerzbank, showing the importance of Europe’s largest economy to its thinking about business strategy.

Private equity big-hitter . In the case of US-based SS&C, it bought wealth management software firm Advent in early 2015 in a $2.7 billion cash deal. (Advent provides services such as portfolio management accounting and reporting, trading, rebalancing and compliance, client portals, data management and fund accounting.)  And another deal of note was that of Anglo-US investment firm Motive Partners, with its purchase of in 2018. Yet another deal worth mentioning in this context was wealth industry software company IRESS's (2017) acquisition of a strategic equity stake in regulatory technology firm Lucsan – that transaction showed how data analytics is becoming more important for firms handling rising compliance workloads. This year, IRESS bought QuantHouse, an international provider of market data and trading infrastructure, for a price of up to €38.9 million ($43.5 million). 

So what to make of the LSEG/Refinitiv transaction?

“The data angle has been widely noted, and is accretive for both sides. From the LSEG perspective, the deal represents a direct route into the burgeoning retail wealth market, with Refinitiv and its platforms like ThomsonOne, Eikon and Beta as the tech chassis. To Refinitiv, the cash will fund tune-ups of these platforms as well as investment in hot areas like the (knowledge) graph technology and AI,” Will Trout, head of wealth management at consultancy firm said that the MiFID II regulations on financial services have not done enough to improve clarity and competition over pricing, and is consulting the industry about market data fees. (One impact of MiFID II already has been to squeeze provision of sell-side research because of the requirement on managers to itemise separately what they spend on research.)

“I note the article states that some firms have called on ESMA to review market data fees. I would echo that. My main concern is with how aggressively the exchanges and index providers pursue commercial terms once they have acquired data sources. It is already expensive for wealth managers to use the pricing, index and analytical data they require for investment reporting, and any move to further increase costs will not be met happily,” a senior figure in the UK’s wealth and technology sector told this publication. 

Taking a more enthusiastic line on the deal is Daniel Connell, who is managing director, Market Structure and Technology at in the US. “I think this merger would benefit the overall market as it creates another broad provider of market data solutions. LSEG is clearly committed to data and data analytics businesses. Combining the strength of the Refinitiv core data sets and technology with the Index and data services of LSEG can produce a stronger set of content and solutions from a single source.”

“I don’t see much in the way of streamlining of products and solutions from the combined entity. I think they are quite complimentary, actually. Where I do see streamlining is in the user experience, as they can now access products across a spectrum of solutions from a single source where things like common identifiers will make for an easier integration process,” he said. 

Refinitiv is a global business. Its sponsorship for this publication’s recent Asia awards event in Singapore and upcoming MENA Awards in Dubai in November for example, shows its drive to build a global footprint. 

LSEG said the combined group is targeting a revenue compound annual growth rate of 5 to 7 per cent over the first three years after the deal is complete. It is also going after annual run-rate cost synergies in more than of £350 million by the end of year five after the acquisition is completed, with “significant additional benefits from refinancing Refinitiv’s existing debt”. The enlarged business will be chaired by Don Robert, LSEG’s chairman, and led by David Schwimmer as chief executive, with David Warren as chief financial officer. 

David Craig will join LSEG’s executive committee and continue as chief executive officer of Refinitiv.