Invest in Four Prominent Data Firms in the UK for Immediate Growth Opportunities
Data's reign as the world's leading growth industry stays unchallenged, with 2.5 quintillion bytes generated daily. But with the sharp increase in data creation, clarity becomes the new gold standard. Companies that can decipher the chaos will dominate.
In the financial realm, London's tech scene is bursting with groundbreaking data companies. The London Stock Exchange (LSE) is one such powerhouse, now known as LSEG (LSE: LSEG). Over the last decade, LSEG has built one of the world's most valued financial data empires. Revenue from data analysis and services now dwarfs trading revenue.
LSEG owns an enormous, 20+ petabyte repository of financial market data, nicknamed the "tick-history" data. This data, capturing every market transaction on a tick-by-tick basis, grants LSEG a unique edge. The acquisition of Refinitiv in 2021 and the 2022 partnership with Microsoft have only increased its value, offering global, low-cost access to data for clients.
Three companies rule the financial market data sector: Bloomberg, LSEG Data & Analytics, and S&P Global Market Intelligence. With generations of infrastructure building under their belts, these giants are hard to displace. Each adds new data automatically, keeping them ahead of the competition.
In 2024, global spending on financial market data reached $42 billion, a 12.4% year-on-year increase. The rise of AI and advanced analytical tools fueled the increase in demand for data. Financial institutions racing to incorporate AI models require immense datasets to draw useful insights, assess risk, and generate conclusions.
LSEG's tick-history data is its most valuable asset. But its dominance doesn't stop there. LSEG also owns the FTSE Russell Benchmarks and Indices business, which compiles the FTSE and Russell indices used by numerous funds worldwide.
S&P Global, a major credit-rating firm, is another data powerhouse. Its market intelligence division offers low-price information services, an indices division for benchmarking, and a credit-rating service with a unique, cyclical value.
Experian, the world's leading provider of information and credit-bureau services, plays in a similar league. It analyzes data to help businesses manage risk and make faster decisions. But unlike LSEG and S&P, Experian offers consumer products, too. Today, these account for 27% of revenue and nearly 200 million users.
In the big data and analytics space, Relx (LSE: REL) is often overlooked. It publishes 17% of all scientific journals and articles, operating ScienceDirect, the world's largest platform for peer-reviewed primary scientific research. The group's LexisNexis platform hosts 138 billion legal and news documents, with 2.2 million added daily.
Relx's risk-analysis business, LexisNexis Risk Solutions, became its largest division by revenue in 2023. It fought fraud in the banking industry and linked online identities to digital devices. AI could revolutionize Relx, given its large, high-quality data pools.
GlobalData (LSE: DATA), with a market cap of £1.5 billion, is the smallest player on this list. It provides business information in multiple sectors, targeting six deals per year for organic and bolt-on growth. Three acquisitions in the second half of 2024—LinkUp, Celent, and Deallus—pushed its life-sciences data archive to unprecedented depth.
Despite its small size, GlobalData is a risky but potentially rewarding proposition. Its growth strategy, targeting six deals per year, could reap significant returns if executed effectively. Analysts at Berenberg anticipate organic revenue growth of 5%-8% in 2025, with M&As topping up growth. GlobalData has the resources to pursue further acquisitions.
When it comes to data, quality matters most. Relx, LSEG, Experian, and, to a lesser extent, GlobalData, boast noteworthy competitive advantages and the scale required to maintain an edge in a data- and misinformation-filled world. These companies may not appear cheap based on traditional P/E ratios, but their data quality and growth potential justify a premium over the market.
Originally published in our website's magazine.
- London's tech scene is flourishing, particularly in the data industry, with groundbreaking data companies like the London Stock Exchange Group (LSEG) leading the way.
- In the financial industry, investing in data analysis and services has become more valuable than trading revenue for companies like LSEG, thanks to the massive amounts of data generated daily.
- With the increase in artificial intelligence (AI) and advanced analytical tools, there is a growing demand for high-quality data in various sectors, such as finance and lifestyle, to draw useful insights and assess risks.
- Technology giants like Microsoft have partnered with data companies to offer low-cost, global access to data, enabling businesses to make informed decisions and stay ahead of the competition.
- In the general-news sector, companies that can decipher the chaos of the data world and provide clear insights will dominate, as clarity becomes the new gold standard in the era of big data.
