The Deal

S&P Global and IHS Markit announced that they have entered into a definitive merger agreement to combine in an all-stock transaction which values IHS Markit at an enterprise value of $44 billion, including $4.8 billion of net debt.

The merger brings together two heavyweights in the capital markets space with highly complementary assets, marking the biggest M&A deal of the year.

What does the S&P Global - IHS Markit merger mean for Private Markets?

Both S&P and IHS Markit serve a wide variety of asset classes and their merger will create a data powerhouse that will further provide investors with critical intelligence. In recent years, we have seen aggressive acquisitions in this space to further utilize and aggregate data to power advanced analytics. The explosive growth of private equity as an asset class, coupled with the increasing pressure from LPs on operational excellence has fueled the demand for powerful data and software solutions.

The combined company will be differentiated in attractive high-growth adjacencies, including ESG, climate and energy transition, private assets and SME, counterparty risk management, supply chain and trade, and alternative data, which together represent $20 billion of total addressable market, growing at least 10% annually. As part of its ongoing commitment to remain on the cutting edge of technology and innovation, the combined company will continue to deploy well above $1 billion annually on technology.

S&P Global Private Equity Products

Currently, S&P offers several solutions which are relevant to private equity market participants, including within its S&P Global Market Intelligence platform:

S&P Capital IQ

S&P CapIQ provides company, deals and business professionals data to investors, in addition to conducting market research, publishing news, and offering several analytical tools. Leveraging the CapIQ platform, users can screen opportunities on a vast combination of financial, qualitative, and event-driven criteria. The “Find Buyers and Targeting” tools help users search and rank potential buyers and investors based on investment criteria, stages of interest, transaction history and financials. The Capital IQ platform offers much more, such as financial data prediction, document data extraction and report creation capabilities. The platform also integrates with CRM tools such as DealCloud and Salesforce, and alternative data providers such as Preqin.

Money Market Directories

Money Market Directories (MMD) is a database tailored specifically for marketing to institutional investors. MMD provides the data to help fund managers build relationships, identify new sales opportunities and sources of capital, perform focused prospecting, and develop targeted mailing campaigns. MMD can also provide access to information on key decision makers who manage investment capital worldwide.

ESG for Financial Institutions

ESG is one of the hot topics of recent years, and for good reason. As the major controllers of global capital flow, LPs and GPs have an outsized influence on the future path of industries and expected standards. S&P’s ESG Analysis tool provides investors multiple layers of ESG insight, powered by the SAM Corporate Sustainability Assessment (CSA), a widely used and respected ESG evaluation methodology.

Other S&P Solutions relevant to private equity

It is virtually impossible to list all of S&P Global’s offerings; the firm is one of the leading capital markets data and software providers in the world. Still, there are a few more offerings that should be mentioned. With so much data available in today’s world, streamlining data collection and validation is crucial. In addition to validating its proprietary data, S&P also offers data extraction and management solutions to investors. Furthermore, S&P provides a portfolio analytics solution, with Excel plug-ins for financial model and report creation. The merger with IHS Markit will certainly boost S&P’s portfolio management and reporting offerings, especially for private capital markets, through IHS Markit’s iLevel solution.

IHS Markit Private Equity Products

Similar to S&P Global, IHS Markit has many products that serve a range of asset classes. On the private markets side, IHS Markit’s leading product is iLevel, a portfolio monitoring solution that combines data collection, analytics, and reporting. The firm also offers an integrated virtual data room and valuation services.

iLevel

iLevel pioneered portfolio monitoring within private equity and remains a leading solution in the space today. iLevel streamlines data collection across the portfolio and consolidates the data into a central repository that serves as a single source of truth for the entire firm. Once the data is in, the platform allows users to analyze and visualize fund and asset performance, including portfolio-wide, individual asset reporting and KPIs, with fully customizable, interactive dashboards and reports. iLevel also offers ESG tracking and reporting that can be customized based on investor needs or portco requirements. Furthermore, through its integration with Prism VDR, iLevel helps users produce DDQs, respond to requests and secure commitments faster. Finally, iLevel integrates with Cambridge Associates private benchmarks to help GPs and LPs with research, capital raising / fund screening, performance measurement, risk management, valuation, and asset allocation.

Prism

Prism's one-to-many secure document sharing supports investor reporting, board communications and reports, financial reporting and many other firm-specific workflows. Prism can be used for M&A deals, fundraising, co-investment diligence, streamlined investor reporting, and portco reporting. Prism is fully integrated with the iLevel solution.

Potential Synergies

As with any other merger and acquisition, the S&P Global - IHS Markit merger represents several synergies that can be harnessed.

Cross selling

When companies reach a certain size, growth strategies naturally start shifting from expansion to new markets into up-selling complementary products to existing clients. Post merger, the joint S&P Global / IHS Markit powerhouse will have a significant client base, with plenty of new products on offer to provide further value, and of course, increase revenue.

Data flow into software solutions

The real value of analytics & software solutions is based on the extent and quality of the underlying data. Within private markets, S&P Global is currently more focused on data, and IHS Markit is more focused on software. There is significant potential for S&P data to flow into IHS Markit’s iLevel product to facilitate PME comparisons and more advanced analytics.

LP multi asset class solutions / GP front-to-back solutions

As the number of solutions the joint entity offers increases, we predict that there will be a higher level of integration between products to seamlessly serve multi asset class LPs. We also expect to see potential development into areas where there are some gaps stopping them from completely servicing GPs such as front office, back office and proprietary data in-house.

What’s Next for S&P Global and IHS Markit?

Due to the size of the deal and the prominence of the two firms, antitrust regulators in Europe and in the US will conduct thorough evaluations of the proposed merger. Assuming that the merger is approved, the firms will then integrate their employees, processes, and products.

Over time, we expect to see more acquisitions and developments from the newly combined entity given the increasing importance of PE in terms of industry size and from the institutional investor side, plus pressure from other large data groups which have been making moves in this space in recent years (Morningstar, Bloomberg, Nasdaq). The future of private equity data and software looks promising, and the joint S&P Global / IHS Markit entity will certainly play a big role in furthering the private equity industry as a whole.

S&P Global + IHS Markit: Consequences for Private Equity Data and Technology