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German exchange giant Deutsche Börse AG is buying a majority stake in Institutional Shareholder Services (ISS) in a deal that values ISS at US$2.275 billion.

Following the deal, the exchange will control 80% of ISS, with the remaining 20% held by U.S. private equity firm Genstar Capital LLC, and ISS management.

Deutsche Börse said the deal gives it the opportunity to capitalize on the growing movement toward ESG investing, given ISS’s involvement in providing ESG data and analytics.

“With this transaction, Deutsche Börse strongly commits to one of the key megatrends in the industry that will fundamentally change the investment space over the coming years,” it said. “ISS’s unique ESG and data expertise will allow Deutsche Börse to emerge as a leading global ESG data player.”

The transaction is expected to close in the first half of 2021, subject to regulatory approvals and other closing conditions.

The deal will bolster ISS’s capital structure and help drive its growth “while leveraging the infrastructure of Deutsche Börse and, in particular, its global index franchise.”

The firms said the deal is expected to generate revenue synergies that add €15 million in EBITDA by 2023.

Toronto-based research firm Investor Economics Inc. is part of ISS’s data and research division, ISS Market Intelligence.