Bloomberg News

McGraw-Hill, CME Said to Weigh Joint Bid for Barclays Index Arm

June 24, 2014

McGraw-Hill Financial Inc. and CME Group Inc. are interested in acquiring Barclays Plc (BARC)’s index business and merging it with S&P Dow Jones Indices LLC -- manager of the benchmark S&P 500 Index (SPX) and Dow Jones Industrial Average, according to people familiar with the matter.

McGraw-Hill and CME are weighing a joint bid for the Index, Portfolio and Risk Solutions unit, or IPRS, which could fetch more than $500 million in a sale, said the people, who asked not to be identified because the matter isn’t public. MSCI Inc. (MSCI:US) and Intercontinental Exchange Inc. are also weighing offers for the business, with first-round bids due by the end of the month, the people said.

IPRS manages indexes including the U.S. Aggregate Bond Index, which tracks the debt markets. The unit, which also sells portfolio management software to investors, is part of the investment bank, which Barclays is overhauling through layoffs and divestitures.

A spokeswoman for MSCI didn’t reply to a phone-call seeking comment, while representatives for Barclays and the other potential bidders declined to comment. Reuters earlier reported that interested parties include Markit Ltd. (MRKT:US), Thomson Reuters Corp. (TRI) and Interactive Data Corp., citing people with knowledge of the matter.

Competing Sales

Barclays, the largest U.K. bank by assets, began considering a sale of its index arm last year, but has delayed the auction in part to wait for Northwestern Mutual Life Insurance Co. to move forward with its sale of Russell Investments Ltd., another index manager, the people said. London Stock Exchange Group Plc in May said it was in exclusive talks to buy Russell.

Barclays has wanted to see how much Russell would fetch before selling its own index business, one person said. It also didn’t want to run a competing sale process while the Russell sale was under way.

The index business generates as much as $30 million in annual earnings before interest, taxes, amortization and depreciation, two people said.

McGraw-Hill and CME started the S&P Dow Jones Indices in 2012. McGraw-Hill owns 73 percent of the index, and CME owns 27 percent, according to their annual reports.

To contact the reporter on this story: Matthew Monks in New York at mmonks1@bloomberg.net

To contact the editors responsible for this story: Mohammed Hadi at mhadi1@bloomberg.net Elizabeth Wollman


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Companies Mentioned

  • MSCI
    (MSCI Inc)
    • $46.56 USD
    • -0.46
    • -0.99%
  • MRKT
    (Markit Ltd)
    • $23.3 USD
    • -0.05
    • -0.21%
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