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$SPGI, a data provider to the capital and commodity markets, has taken a minority stake in Algomi, a fintech company, with offices in New York, Hong Kong and London. Algomi is the second minority fintech investment this year for S&P Global, following its stake in Kensho. S&P Global will have a seat on the Algomi BoD. Financial details are awaited.
$SPGI expanded its strategic relationship with the Climate Bonds Initiative by joining the Climate Bonds Partner Program. This decision means that all of the company's divisions including S&P Global Ratings, S&P Global Market Intelligence and S&P Global Platts are now represented in the program.
For FY17, $SPGI increased its revenue guidance from flat growth to low single-digit growth. The company increased GAAP EPS to be $5.72-5.92, up from $5.65-5.90. Adjusted EPS increased to $6.00 to $6.20, up from previous guidance of $5.90 to $6.15.
During 4Q16, in $SPGI’s Ratings segment, revenue increased 14% including a 1% unfavorable impact from FX. Transaction revenue grew 26% while non-transaction revenue grew 5%. In Market and Commodities Intelligence, revenue declined 11%. In S&P Dow Jones Indices, revenues grew 13%.
In 4Q16, $SPGI’s adjusted operating profit increased 17% and adjusted operating margin increased 530BP. The adjusted operating margin improved primarily due to revenue growth, continued progress in productivity initiatives and the sale of lower margin businesses. The adjusted effective tax rate increased 500BP.
During FY17, $SPGI expects its GAAP EPS to be approx. $5.65-5.90 and adjusted EPS to be about $5.90-6.15. Reported revenue is expected to be unchanged from the prior year due to the impact of the sale of J.D. Power, two pricing businesses, and Equity and Fund Research.
During 4Q16, $SPGI completed its accelerated share repurchase (ASR) program resulting in the reduction of 6.1MM shares of which 5.3MM were received 3Q16. The Company has approx. 25.8MM shares remaining under the existing share repurchase authorization from the BoD.
$SPGI said that it is going through the year-end review and 2017 to 2019 strategic planning process and evaluating the ways for investing in the business. When it comes to M&A opportunities, company would selectively choose the businesses which meets its parameters for growth and returns.
$SPGI reported that beginning in 4Q16, S&P Global Market Intelligence and S&P Global Platts will be included in a new segment called Market and Commodities Intelligence. 4Q16 results and full-year 2016 results of both businesses will be reported in this new segment.
Revenue from S&P Global Ratings segment, $SPGI's biggest segment, increased 9% in 3Q16 despite the initial uncertainty from the Brexit vote. In the three months since the Brexit vote, debt markets have reacted positively. S&P Global Marketing Intelligence segment's revenue increased 21%, helped by the addition of SNL Financial business.
$SPGI, which rebranded as S&P Global from McGraw Hill Financial (MHFI) in April 2016, completed several business divestitures in 3Q16. This includes J.D. Power business, two pricing businesses (SPSE & CMA), and equity research business. $SPGI acquired PIRA Energy Group and Trucost and completed 3-year $140MM cost reduction initiative in 3Q16.