International exchange organisation Deutsche Börse announced the completion of its acquisition of a majority stake in leading corporate governance and ESG data and analytics company Institutional Shareholder Services (ISS). According to Deutsche Börse, the growing demand by investors for in-depth extra-financial data, research and analytics served as a key driver of the acquisition, with a particular focus on the ESG investing megatrend. In a statement announcing the completion of the acquisition, the company said that the transaction is “a further demonstration of Deutsche Börse’s commitment to ESG.”
Stephan Leithner, Member of the Executive Board of Deutsche Börse AG, responsible for the Group’s Pre- & Post-Trading businesses, said:
“The quality, precision and breadth of ISS’ data and research is unique in the market. Especially the company’s ESG expertise and data capabilities are highly complementary to Deutsche Börse’s businesses along the entire value chain. This acquisition therefore is a logical step in our ESG growth strategy, adding an important piece to the puzzle to become one of the world’s leading market infrastructure players on this critical development.”
Deutsche Börse and ISS announced the agreement in November 2020. Under the terms of the agreement, Deutsche Börse acquired an 81% stake in ISS, in a transaction valuing ISS at $2.3 billion, while ISS management and private equity investor Genstar Capital will retain the remaining stake. The transaction marked a win for Genstar, who acquired ISS in late 2017 at a valuation of $720 million.
The transaction is the latest in a series of acquisitions in the ESG data and analytics space, as investors increasingly move to integrate sustainability factors into the investment process, driving growing demand for ESG information and research. Last year also saw the acquisition of leading ESG ratings and research company Sustainalytics by investment research firm Morningstar.
Gary Retelny, President and CEO of ISS, said:
“We are pleased to be joining the Deutsche Börse group of companies and look forward to working with our new colleagues in furtherance of our long-standing mission to empower investors and companies to build for long-term and sustainable growth. ISS will continue to deliver the same independent and high-quality research, ratings, and other offerings our clients have come to expect, and we will continue to invest and innovate to ensure they receive next-generation solutions.”