The strategic investment will help the growth of its Data, Connectivity and Indices (DCI) business by strengthening its research-based index design capabilities as well as broaden the range of index products and clientele.
Singapore Exchange (SGX) has paid €186 million ($204.83 million) in cash for a 93-percent stake in independent index provider Scientific Beta, it announced in a press release.
The Singapore-based company, established by EDHEC-Risk Institute (ERI Asia), an affiliate of EDHEC Business School, specializes in smart beta strategies – investment strategies that emphasize the use of alternative index construction rules instead of traditional market capitalization-based indices – with expertise in factor-based and risk-managed solutions.
Scientific Beta is a well-known brand among asset owners worldwide. Over 60 asset owners and asset managers use its indices to track or benchmark their smart beta investments, which total almost $55 billion. This figure that has grown more than tenfold in less than four years, with 30 percent of these assets under replication integrating ESG dimensions, the announcement said.
«Important Step»
SGX CEO Loh Boon Chye called the acquisition «an important step» in the evolution of the firm's index business. «Besides being complementary to our existing SGX Index Edge thematic and custom index capabilities, we also see new product opportunities based on Scientific Beta’s indices.»
In the announcement, SGX noted the «significant growth» in factor investing in recent years. It cited BlackRock data that assets using factor-based strategies are forecast to reach $2.7 trillion by 2020, at a compound annual growth rate of 17 percent between 2011 and 2020.
