Deutsche Börse set out a plan to boost its revenues by as much as a third by the end of 2018, as its new chief executive seeks to shake up Europe’s largest exchanges operator.
Carsten Kengeter, the former head of UBS’s investment bank who took the helm at Deutsche Börse on June 1, said the German group was “a good, stable organisation” but added that it “needs more growth”.
“[That] is the impulse I want to give the organisation,” he said.
As part of a plan unveiled on Monday evening, Deutsche Börse will target annual increases of between 5 and 10 per cent in its net revenues, and 10 and 15 per cent in its operating profits each year.
If achieved, this would lift the group’s net revenues — which it expects to be between €2.2bn and €2.4bn this year — to between €2.8bn and €3.2bn in 2018. Operating profit, which is expected to be in the region on €1bn this year, would rise to between €1.55bn and €1.75bn over the same period.
The growth plans are the latest signal of intent from Mr Kengeter, who has already superintended three acquisitions in his two months in charge of the German group.
On Sunday, Deutsche Börse said it was buying foreign-exchange trading platform 360T for €725m in its biggest deal for almost a decade. It confirmed on Monday that it would spent SFr650m to buy out SIX, the group that operates most of Switzerland’s market infrastructure, from two joint ventures, including Stoxx, the index compiler.
Mr Kengeter said it was likely that Deutsche Börse would carry out a “small” capital increase to help fund the 360T deal.
The flurry of dealmaking marks a break from the recent history of Deutsche Börse, which has not engaged in large scale dealmaking since the European Commission blocked a proposed merger with NYSE Euronext in 2012.
However, Mr Kengeter played down the idea that the deals heralded the beginning of an aggressive drive for acquisitions. “These acquisitions are enablers of our organic path as opposed to wildly ambitious acquisitions,” he said.
The exchange operator plans to bolster its growth by stepping up its activities in fast-growing regions, such as Asia, and is looking to accelerate its expansion into new asset classes as well as strengthening its current areas of expertise.
Mr Kengeter cited the acquisition of 360T, which will give Deutsche Börse both access to a new group of customers and a significant presence in the currency market for the first time, as an example of this plan.
The group also expects to free up an extra €50m in investment capacity from 2016 through a variety of cost-cutting measures.
Deutsche Börse said its net revenues came in at €583m in the second quarter, up 19 per cent from the same period a year earlier. Operating profits rose 14 per cent to €271.4m.