Why the IHS Markit acquisition of Ipreo matters for munis

Register now

IHS Markit's agreement to buy Ipreo from Goldman Sachs and Blackstone private-equity funds for $1.86 billion marks a milestone in the consolidation of technology and platform service providers for the municipal market.

The deal, announced in a press release Monday, puts IHS Markit's services business and customer base under the same roof with Ipreo's data and analytics, part of the expanding technological evolution of the municipal bond and fixed income markets.

“This should certainly be additive to IHS Markit’s other business lines," said Stephen Winterstein, managing director of research & chief strategist at Wilmington Trust Investment Advisors. "Ipreo is clearly a leader in their niche — it will be interesting to see IHS Markit leverages and integrates its own data and research resources to enhance Ipreo’s delivery.”

He added that this acquisition moves the combined company closer to rounding out a complementary set of products to serve the municipal bond market.

Patrick Luby, senior municipal strategist at CreditSights, said the deal is affirmation of the technological evolution of the muni market.

"It used to be about who you knew, and now it is becoming who you are connected to," he said. "All of this is behind the idea to connect the issuers and investors — which is what the market has always been."

"This move won't change how things are right now" but "will alter the future of the industry," Luby said. "This is still a $3.7 trillion market, it will take a long time before all of the outstanding bonds are transformed, but it means the municipal bond industry is re-positioning to thrive as the nature of the market shifts and it's exciting."

The acquisition is expected to close in the second half of 2018, subject to customary closing conditions and regulatory filings and approvals under the UK Financial Conduct Authority, the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976 among others.

Richard Ciccarone, president of Merritt Research Services LLC, said that the pricetag for the deal was not surprising.

“Now with the technology, companies are expected to stay 10 steps ahead, the more advanced the tech, the more capital you need in order to prepare for the future,” he said. “There will be more movement to come, hopefully leading to better service, price and product.”

Barnet Sherman, director of municipal impact credit research at Neighborly Investments, added that the Ipreo merger with IHS Markit is further confirmation that data and technology are leading the municipal bond market forward into the 21st century for fixed income markets.

"As a financial technology company focused on modernizing and democratizing the municipal bond market, here at Neighborly Investments we're encouraged by these efforts to bring tech, analytics, and data science to make the market more transparent and efficient."

John Hallacy, contributing editor at The Bond Buyer, said that Ipreo has transformed and digitized the work flow and many other aspects of the municipal market over the last several years.

“Taking away administrative burdens is a gift to many in the business," he said. "Any time that an innovator can team up with a much larger platform it is able to grow and reach new heights that would have been more difficult to do on their own.”

For reprint and licensing requests for this article, click here.
Primary bond market Investment technology Fintech