Interactive Data is to acquire a majority 64% stake in Tokyo-based reference data outfit NTT Data Financial (NDF) from NTT Data Corp for $20.2 million.
Interactive Data and NDF have been partners in a re-distribution relationship in Japan for more than 14 years, providing local financial institutions with global end-of-day securities pricing, evaluations and reference data, including portfolio valuation and accounting.
NDF generated revenue for the fiscal year ended 31 March, 2008 of approximately $11.7 million with operating expenses of approximately $8.8 million, which includes depreciation and $4.4 million in royalties payable to Interactive Data Corporation.
The deal is expected to close by the year-end, at which point NTT DATA Corporation will retain a 10% interest in NDF. At that time, minority shareholders, who collectively own 26% of NDF, will also be able to tender their shares. Interactive Data says it plans to acquire the remaining equity of NDF over the coming years, at an agreed purchase price of $11.4 million in cash.
Interactive Data says the deal will open a new market in Japan for the sale of additional market data products, including fixed income analytics, valuations of complex financial instruments and indicative valuations of exchange-traded funds (ETFs) and other related structures. After the transaction is closed, Interactive Data plans to change the name of NDF to Interactive Data Japan KK.
James Farrer, managing director of Interactive Data Asia-Pacific, says: "Moving from a distributor model to an ownership model in Japan is an important milestone for us. Financial institutions are focused on driving efficiencies in financial operations across their front, middle and back offices while remaining compliant with evolving regulations. Interactive Data plans to build on NDF's strengths...to expand the range of content and services that we can provide to Japanese financial institutions."