Data firm IHS Markit to buy Ipreo in $1.86 billion deal

(Reuters) - Data firm IHS Markit Ltd INFO.O said on Monday it will buy Ipreo from private equity funds Blackstone Group LP BX.N and Goldman Sachs Group Inc GS.N for $1.86 billion to expand its financial services operations.

IHS, whose diverse set of businesses range from selling data on automotive and technology industries to publishing Jane’s Defence Weekly, said the deal will be funded through debt financing from HSBC.

The deal is a windfall for the buyout arm of Blackstone and Goldman Sachs, which acquired Ipreo from KKR & Co LP KKR.N in April 2014 for about $975 million. (

The valuation of Ipreo, whose products are used by investment bankers working on new stock market listings, has quadrupled since 2011 when KKR took over Ipreo in a $425 million deal.

IHS Markit said it found Ipreo’s alternative investment business, which includes private equity, hedge funds, real estate and commodities, a fast-growing sector.

“Alternative segment is very attractive to us and over $10 trillion of assets under management invested in alternatives and the sector continues to show strong growth, expected to reach over $20 trillion by 2025,” said senior executive Adam Kansler, in a conference call with analysts.

IHS said it would pause its share buyback program until debt levels return to its targeted two to three times leverage ratio. The company said its leverage ratio will be about 3.6 times at close, delevering to below 3 times by the third quarter of 2019.

To date, $750 million worth shares have been bought back against a share buyback commitment of $1.1 billion in 2018, IHS said on a conference call with analysts.

Ipreo was created in 2006 when private equity firm Veronis Suhler Stevenson LLC merged i-Deal LLC and Hemscott Group Ltd, with backing from Citigroup Inc C.N and Merrill Lynch. The company supports banks, public and private companies in raising capital, through financial and data services.

IHS said it expects to close the deal in the second half of 2018, subject to regulatory approvals.

Thomson Reuters Corp TRI.TO, the parent company of Reuters News, competes with Ipreo and IHS Markit in some segments of the financial data business.

In January, Blackstone agreed to buy a majority stake in the Financial and Risk business of Thomson Reuters Corp in a $20 billion deal. Reuters News will remain part of Thomson Reuters.

Even after the sale Blackstone still sees the chance for collaboration between Ipreo and the Financial and Risk business, according to Martin Brand, senior managing director in Blackstone’s private equity group.

“There are significant synergy opportunities between Thomson Reuters and Ipreo/IHS Markit. We look forward to working with them as partners after closing to realize these opportunities,” Brand, who is also a director of Ipreo, said in an interview.

Barclays and HSBC are the financial advisers for IHS Markit, which is based in London.

Reporting by Diptendu Lahiri in Bengaluru; Additional reporting by Joshua Franklin in New York; Editing by Bernard Orr and Lisa Shumaker