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IHS Markit looks to expand alternatives data footprint with Ipreo deal

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IHS Markit looks to expand alternatives data footprint with Ipreo deal

The acquisition of Ipreo Holdings LLC is geared toward the rapidly growing market for data on alternative investments and complements IHS Markit Ltd.'s existing businesses, IHS Chairman and CEO Lance Uggla said on a call to discuss the $1.86 billion transaction.

The alternative segment is "a large and underpenetrated market with long-term double-digit growth prospects," Uggla said. Adam Kansler, IHS' executive vice president of financial markets, said more than $10 trillion of AUM is invested in alternatives and the sector is expected to reach over $20 trillion by 2025. The Ipreo deal significantly increases IHS' presence in the private market and alternative segment, where the company has been investing organically, Kansler said.

Ipreo's private capital markets business provides data to "13 of the top 20 private equity firms, nine of the top 20 real estate firms and 21 of the top 50 venture capital firms," Kansler said.

The company could see significant revenue from the deal through new issuance data and pricing, access to Ipreo's customer network and the opportunity to develop new index offerings, he added.

IHS expects to achieve run-rate revenue synergies of $35 million by the end of 2021 and run-rate cost synergies of $20 million by the end of 2019. The deal is also expected to yield revenues of approximately $370 million and adjusted EBITDA of $115 million in 2019.

The deal also led IHS to raise its longer-term organic growth rate outlook to a range of 5% to 7%, up from 4% to 6%. The company increased its financial services growth outlook to the mid- to high-single digits.

IHS also announced the planned sale of its derivatives processing business, MarkitSERV, after a thorough review of its financial services' businesses. The long-term growth prospects for the business are "best served by combining it with other post-trade processing market participants," Uggla said. MarkitSERV generated about $150 million in revenue in 2017.

The acquisition of Ipreo and the divestiture of MarkitSERV will reposition IHS Markit's financial services portfolio for increased and higher growth, Uggla said.