Deutsche Börse continues to deliver a very robust commercial and financial performance, while its margins and return on equity consistently place it at the top of its sector, even ahead of American market operators such as Nasdaq or CME.
Barring any last-minute resistance from competition authorities, next year the group's three cash machines - data, derivatives trading, and Clearstream - will be bolstered by the integration of the Allfunds distribution platform, a dominant player in Europe.
This will further consolidate the position of Deutsche Börse and its perfectly integrated platform, a direct beneficiary of the gradual decline of London as a financial center, which enjoys a quasi-monopolistic status in its various niches.
Its pre-tax profit has tripled over the last decade. While capital distributions to shareholders have not kept pace, it is because these resources have been largely directed toward acquisitions: ISS for €1.8bn in 2021, Simcorp for €3.9bn in 2023, and the upcoming acquisition of Allfunds for €5.3bn.
The least that can be said is that value creation from the two previous major external growth operations was very satisfactory. This bodes well for the upcoming Allfunds deal, a business that has long displayed exceptional profitability.
Throughout the last cycle, acquiring Deutsche Börse shares when they hit their valuation floor of 3x equity and 10x-11x EBITDA was rarely a bad idea. The opportunity arose several times, including most recently last February at the peak of the panic affecting the entire technology sector.
