The Next Big Battle Ground: Data War

 

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The “P” in the $85 Billion data company S&P (Standard & Poor’s) Global, stands for “Poor’s” — as in Henry V. Poor, a 19th-century financial analyst who joined his brother John Poor in his railroads business after his graduation.

S&P Global, today

Henry Poor as The Hustle joked, was not poor.

In 1849, John Poor purchased the American Railroad Journal, of which Henry Poor became manager and editor.

In 1860, Henry Poor started publishing the History of Railroads and Canals in the United States, an attempt to compile comprehensive information about the financial and operational state of U.S. railroad companies.

He went on to establish H.V. and H.W. Poor Co. with his son, Henry William, and published annual updated versions of his book.

Henry V. Poor

eH later started publishing The Railroad Manual, “a manual on railroads in 1868, which was geared toward investors… and included information on railroad companies” like their capital, rolling stock, expenditures, and routes.

The last Poor’s Manual was published in 1924. The company eventually evolved into the globally acclaimed rating agency Standard & Poor's with subsidiaries in almost every aspect of the global economy, and in every country of the world.

Then this week, something big happened.

Analysts have dubbed it as the biggest deal of 2020: a $44 billion exchange between two major data giants selling information.

Just selling information.

And this is happening at a time OPEC and its allies are running from pillar to post on how to salvage the global oil market. They couldn't even agree on best strategy to save oil on Sunday, and they are meeting again today.

The British mathematician Clive Humby, it was who is credited with coining the phrase “data is the new oil. ”Often lost in the catchiness of this idea is Humby’s further explanation that “although inherently valuable, data needs processing, just as oil needs refining before its true value can be unlocked.”

The value of “unlocking” data was made abundantly clear this week when S&P Global announced a $44B all-stock deal for IHS Markit. These are two of the biggest data providers on Wall Street.

Though S&P’s corporate history dates back to the 1860s, when the company kept tabs on railroad data. Today, S&P operates 3 primary businesses: 1) bond ratings; 2) stock indexing (including the ubiquitous S&P 500); and 3) data analytics (CapIQ, Platts).

IHS Markit -- which was formed by the merger of 2 smaller firms in 2016 -- is known for its credit derivatives data as well as energy and transportation data.

The market data industry is exploding… with its biggest vendors now finance’s kingmakers.

The London Stock Exchange is looking to close a $27B deal for S&P competitor Refinitiv while the privately held Bloomberg -- Wall St.’s OG data firm -- could be worth ~$60B.

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S&P Global itself has seen its market value increase 10x to $85B over the past decade.

If data is the new oil, then the refiners are getting their hands on the cheddar writes The Hustle.

Written by Kelechi Deca