(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)
By Richard Beales
NEW YORK, May 21 (Reuters Breakingviews) - Temasek's [TEM.UL] roughly $500 million investment in Markit looks timed just so. Financial "Big Data" and the potential in the Asian market aren't necessarily new themes. But with Bloomberg on the defensive, it's a good moment to suggest there's potential for another competitor – perhaps, before too long, another publicly traded one.
The deal values Markit at something around $5 billion. That compares with General Atlantic's investment of $250 million for a 7.5 percent stake in early 2010, which gave the private financial information and services firm a price tag of $3.3 billion. Markit, a pioneer in areas like credit derivatives pricing, has grown on the back of data and related products that both complement and compete with services provided by higher profile organizations like closely held Bloomberg and publicly traded but family controlled Thomson Reuters (TRI.TO)(TRI.N), the parent company of Breakingviews.
The investment has several underpinnings, including a growing need by worldwide institutions to manage and mine mountains of information and the potential for Markit to expand in Asia. The $160 billion Singapore government fund's contacts at places like China Construction Bank (601939.SS) and DBS, in which it owns big stakes, are obvious potential sales targets in the region.
But the announcement also happens to coincide with a moment of embarrassment for Bloomberg following a recent furor over journalists having access to customer data. If banks and other users start to shift their loyalties – or even if they simply spread business around to ensure they have another option available – that should benefit Markit. According to news reports this week, the firm has already teamed up with banks and Thomson Reuters to provide a messaging service that could rival Bloomberg's popular version.
There's a final twist. Temasek likes to take anchor stakes in companies before they go public. On the one hand, buying existing shares allows Markit employees and other shareholders to sell, making an initial public offering a less important way of providing liquidity. Then again, the Singapore government and General Atlantic are now the biggest holders. They tend to be more patient money, but they'll also be sharply attuned to the market for Markit.
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- Markit, a London-based financial information and services provider, said on May 21 that Temasek had made a significant investment in the company.
- Reuters reported earlier in May that Temasek, the Singapore government investment company, was in talks to buy a stake for around $500 million. Temasek is buying an approximately 10 percent stake, according to a person familiar with the transaction.
- Markit has teamed up with banks and Thomson Reuters, the parent company of Breakingviews, to develop a new messaging service to challenge the offering from Bloomberg, the Wall Street Journal reported on May 20.
- Markit release: link.reuters.com/jyj38t
- Reuters: Temasek in talks to buy stake in Markit Group-source [ID:nL3N0DK1L8]
The other foot [ID:nL2N0DU27N]
- For previous columns by the author, Reuters customers can click on [BEALES/]
(Editing by Jeffrey Goldfarb and Martin Langfield)
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