NASDAQ decided to purchase Dorsey,Wright & Associates, LLC (DWA) for $225 million to strengthen its position as a leading smart beta index provider in the United States.
NASDAQ will become the largest smart beta indexes provider
According to NASDAQ, the acquisition will boost its index portfolio and bring model-based strategies and analysis to support the financial advisory community.
DWA is a data analytics, passive indexing and smart beta strategies provider with 17 ETFs. It will increase NASDAQ’s capacity for growth in the index business across asset classes and geographies and provides significant opportunities in index licensing.
NASDAQ has 69 licensed smart-beta ETFs focused primarily on dividend and income strategies. Combining with DWA’s ETFs, NASDAW Global Indexes will become the largest smart-beta indexes providers. Its assets benchmarked to its family of smart beta indexes are worth around $45 billion. The assets benchmarked to all NASDAQ Indexes are worth more than $105 billion.
NASDAQ’s strong growth area
NASDAQ President Adena Friedman emphasized that the index business is the strong growth area of the company for the past decade, and the acquisition of DWA will further strengthen its position as a major player and industry innovator.
“We are always looking for opportunities to expand NASDAQ’s index offering with quality products that deepen our relationships with the investing community. DWA provides a natural complement to our business and growth strategy,” said Friedman.
NASDAQ plans to integrate the DWA team with its broader organization, and leverage DWA’s expertise in research and deep relationships with the financial advisor community, added Friedman.
On the other hand, DWA President Tom Dorsey said, “Smart Beta represents one of the fastest growing sectors within the ETF market. This deal will allow us to grow significantly, while continuing to create products and strategies that meet the needs of our clients.”
NASDAQ expects to generate revenue synergies by deepening DWA’s licensing relationships with the ETF sponsor community around the world. The company also intends to support DWA’s growth strategy by accelerating its product development, raising awareness of its indexes and increasing the base of potential market participants through global distribution network.
NASDAQ will fund the transaction using a mix of debt and cash on hand. The company expects the acquisition to be accretive to its earnings at the closing of the deal subject to customary conditions and approvals. The deal is expected to close in the first quarter of 2015.
