January 23, 2020 / 10:07 AM / 25 days ago

UPDATE 1-Singapore Exchange buys index provider for $206 mln

(Adds results in para 3, other details in paras 4-5)

SINGAPORE, Jan 23 (Reuters) - Singapore Exchange Ltd (SGX) is buying independent index provider Scientific Beta Pte Ltd for 186 million euros ($206.35 million) in its biggest acquisition, a move it said was aimed at scaling up its index business.

In a statement on Thursday, SGX CEO Loh Boon Chye said the acquisition was complementary to SGX’s indexes and opened up new product opportunities.

SGX also reported a net profit of S$99 million ($73.4 million) in the second quarter ending December, up 3% from a year earlier. Revenue also rose 3%.

Under Loh, who joined SGX four years ago, the bourse has become a global listing hub for business trusts and real estate investment trusts. It has also taken many measures to shore up market liquidity and strengthen its regulatory framework after a penny stocks crash in 2013 battered investor confidence.

The acquisition of the index provider by SGX comes at a time when exchange operators are focusing more on data products to increase revenue, while also trying to expand their global reach.

SGX, which has a market value of S$9.4 billion ($6.97 billion) said it is buying 93% of Singapore-headquartered Scientific Beta for cash.

Established by France’s EDHEC Business School, Scientific Beta offers investable smart beta indexes to more than 60 asset managers, mainly in Europe and the United States.

Compared with traditional indices that pick constituents mainly based on market value, smart beta indexes add in other factors such as volatility, earnings growth and dividends.

As of Sept. 30, there were $54.7 billion in assets replicating Scientific Beta’s indexes, growing more than 10 times in just under four years. ($1=0.9014 euros) ($1 = 1.3484 Singapore dollars) (Reporting by Anshuman Daga; Editing by Muralikumar Anantharaman)

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