Nasdaq to Boost Smart Beta Index Unit with $225M Deal
Nasdaq OMX Group Inc will buy smart beta index provider Dorsey, Wright & Associates LLC (DWA) for $225 million to boost its index business.
Nasdaq will manage DWA's exchange-traded funds (ETF) and its own so-called smart beta ETFs, focused mainly on dividend and income strategies.
Smart beta strategies, also known as "alternative" or "strategic beta" products, promise reasonable returns with lower risk by focusing on older, steadier companies with consistent dividends.
"Smart Beta represents one of the fastest growing sectors within the ETF market," DWA President Tom Dorsey said in a statement.
Nasdaq Global Indexes will have nearly $45 billion in assets benchmarked to its smart beta indexes and more than $105 billion benchmarked to all its indexes following the deal.
Evercore's Chris Allen said this was "a small but "smart" deal" as it targeted a growth area where Nasdaq already has some scale.
Nasdaq said it will fund the transaction through debt and cash, and expects the deal to add to earnings once it closes, which is expected in the first quarter.
The company does not expect the deal to have a material impact on its financial leverage or capital return strategy.
Nasdaq's shares closed at $47.86 on Friday. (Reporting by Amrutha Gayathri in Bengaluru; Editing by Savio D'Souza)