Deutsche Boerse, the German stock exchange operator, has agreed to acquire SimCorp, a Danish provider of investment management software, for €3.6 billion ($4.3 billion). The move comes as Deutsche Boerse looks to expand its software offerings and tap into the growing demand for automation in the investment industry.

SimCorp’s software is used by asset managers, pension funds, and insurance companies to manage their investment portfolios. The company’s solutions cover front, middle, and back-office functions, including portfolio management, risk management, compliance, and accounting. SimCorp has a strong presence in Europe and North America and serves some of the world’s largest financial institutions.

The acquisition of SimCorp will allow Deutsche Boerse to complement its existing portfolio of trading and clearing services with a suite of investment management solutions. The deal is expected to generate cost savings of around €50 million ($60 million) per year from 2025 and boost Deutsche Boerse’s earnings per share by around 5% in the first full year after completion.

The acquisition is subject to regulatory approval and is expected to close in the first half of 2022.

Deutsche Boerse’s move into investment management software is part of a broader trend in the financial industry towards automation and digitalization. The COVID-19 pandemic has accelerated this trend, as firms seek to reduce costs, improve efficiency, and adapt to changing market conditions.

The deal also comes amid increasing competition in the investment management software space. SimCorp’s main rivals include firms such as BlackRock, State Street, and Fidelity. These companies have been investing heavily in technology and data analytics to stay ahead of the curve.

Deutsche Boerse has made several acquisitions in recent years as it looks to expand its business beyond traditional trading and clearing services. In 2019, the company acquired Axioma, a provider of risk management and portfolio optimization software, for $850 million. Last year, it acquired majority stakes in Quantitative Brokers, a provider of algorithms and analytics for futures and fixed income markets, and Institutional Shareholder Services, a provider of corporate governance and responsible investment solutions.

The acquisition of SimCorp is Deutsche Boerse’s largest deal to date and highlights the company’s ambition to become a leading provider of software solutions for the investment industry.

In conclusion, Deutsche Boerse’s acquisition of SimCorp is a significant move in the investment management software space. The deal will allow Deutsche Boerse to expand its software offerings and tap into the growing demand for automation and digitalization in the investment industry. With the deal expected to generate cost savings and boost earnings, Deutsche Boerse’s move into investment management software is likely to pay off in the long run.