At today’s Investor Day, Deutsche Börse AG will present its new “Horizon 2026” strategy.
The core elements of the strategy are:
continued strong organic growth of seven per cent per year until 2026
the completed acquisition of SimCorp, contributing a further three per cent per year to growth
the new Investment Management Solutions segment as a strategic cornerstone with high growth potential and recurring revenues
an expansion of the leading position in the area of digital platforms for existing and new asset classes
a refined capital management with more active use of share buy-backs, beginning in the first quarter 2024 with a volume of €300 million
With regards to organic growth, Deutsche Börse can look back on a continuous successful track record. Based on structural industry trends, evolving customer needs and a normalising interest rate environment, organic growth will remain the cornerstone of the strategy in the future.
Organic growth will be strengthened by the new Investment Management Solutions (IMS) segment. In this segment, Deutsche Börse Group bundles all solutions for the increasingly important buy side (asset managers und asset owners). It combines the existing subsidiaries Institutional Shareholder Services (ISS) and STOXX as well as Axioma with the newly added software and SaaS business of SimCorp. The segment contributes in particular to higher recurring revenues for Deutsche Börse Group. Furthermore, the company expects significant synergy potential of around €90 million on EBITDA level through increased revenues and cost efficiencies.
The combination of SimCorp and Axioma creates a fully integrated "end-to-end" investment solutions offering for institutional investors - from portfolio management to reporting. By combining ISS's ESG business with STOXX's index business, high-quality data can be increasingly utilised for the development of new indices for institutional investors.
Deutsche Börse is a leader in the field of digital solutions. In the long term, there is further growth potential from new technologies arising from the digitalisation of existing or new asset classes along with their corresponding trading and settlement platforms. For Deutsche Börse Group, the focus is on the further expansion of cloud usage, the accelerated development of Clearstream's digital post-trading platform D7 and the establishment of a trading platform for digital asset classes to significantly expand the range of both investable and tradable instruments. The necessary initial investments are already included in the Horizon 2026 strategy, while the long-term positive effects on the Group's revenues are not included.
Net revenue to increase on average by 10 per cent annually
Overall, Deutsche Börse expects organic growth and the new IMS segment to result in average annual growth in net revenues of around 10 per cent compared to 2022 to around €6.4 billion in 2026. The expected organic growth will account for the largest share of this, with average annual growth of around 7 per cent, which is mainly driven by structural growth. Operating costs will continue to be managed effectively. For 2022 up to and including 2026, Deutsche Börse therefore expects an average annual increase in earnings before interest, taxes, depreciation and amortisation (EBITDA) of around 11 per cent to approximately €3.8 billion.
Theodor Weimer, CEO of Deutsche Börse, comments on the new strategy: “Over the past years, we have expanded our strong business model significantly into higher growth and recurring revenue areas. Horizon 2026 is a natural evolution of our strategy and mainly based on three strategic imperatives: first, the continued delivery of strong organic growth, which has been a proven strength of Deutsche Börse over the last years. Second, the successful implementation of the new Investment Management Solutions segment with its strong growth and high synergy potential. And last but not least we want to expand our leading role in the digitalisation of asset classes.”
As part of its mid-term growth strategy, Deutsche Börse Group has refined its capital management. Going forward, Deutsche Börse aims to distribute dividends equivalent to between 30 and 40 per cent of net profit attributable to its shareholders. Furthermore, an increasing dividend per share is planned. In case of excess liquidity, it is intended to complement the dividend with share buy-backs. As part of the refined capital management the Executive Board of Deutsche Börse AG resolved yesterday to initiate - for the first time under the refined capital management - a share buy-back programme of €300 million beginning in the first quarter of 2024.