Intercontinental Exchange Buys BofA's Income Index Platform
Zacks Investment Research | Oct 23, 2017 05:56AM ET
Intercontinental Exchange (NYSE:ICE) recently acquired Bank of America Merrill Lynch (NYSE:BAC) Global Research division’s fixed income index platform to ramp up its index services. The transaction is not expected to be accretive to 2017 financial results. The acquisition was announced in June of this year.
The indices will be re-branded as ICE BofAML and come under the umbrella of ICE Data Services. The acquisition was announced in June this year.
ICE BofAML Indices are the second-largest fixed income indices by assets under management (AUM) globally. The combination will result in an asset compilation of nearly $1 trillion in the AUM benchmarked combined fixed income index business of Intercontinental Exchange.
With this acquisition, Intercontinental Exchange intends to expand its index offering to enable customers to select from a wide range of third-party benchmark solutions. Moreover, with the addition of the indices, the acquirer will now be able to offer a comprehensive portfolio that comprises more than 5,000 global fixed income, currency and commodity indices.
ICE BofAML Indices will be offered along with ICE’s existing index offering, which includes the ICE U.S. Treasury indices, introduced in 2015. Further, it is also inclusive of Intercontinental Exchange’s index services, which serve as the basis for ETFs and structured products across fixed income, currencies, equities and commodities.
Intercontinental Exchange’s has solid history of acquisitions. Strategic acquisitions have not only expanded growth of ICE but have also resulted in expense synergies. On July 2017, Intercontinental Exchange completed the acquisition of CE Endex shares from N.V. Nederlandse Gasunie to add capabilities to the acquirer’s European gas and power portfolio.
Inorganic endeavors reflect the company’s diversifying aims to emerge in rapidly growing markets, while enhancing its capital efficiency, cross-selling and product development opportunities in the long run.
Mergers and acquisitions diversify and add capabilities to a company’s portfolio, thereby accelerating its growth profile. Recently, Nasdaq, Inc. (NASDAQ:NDAQ) completed the buyout of London-based startup Sybenetix, to strengthen and expand its position in the surveillance space.
Zacks Rank & Share Price Movement
Intercontinental Exchange carries a Zacks Rank #3 (Hold). You can see .
Shares of Intercontinental Exchange have underperformed the industry year to date. While Intercontinental shares have returned 17.2%, the industry has gained 19.7%. Nonetheless, we expect the company’s diversified product offerings and strategic acquisitions to further drive its shares in the near term.
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Stocks to Consider
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CBOE holdings operates as an options exchange in the United States. The company delivered positive surprises in the trailing four quarters with an average beat of 5.66%.
Marsh & McLennan Companies, Inc. provides advice and solutions in the areas of risk, strategy and people worldwide. The company delivered positive surprises in three of the last four quarters with an average beat of 3.76%.
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