New York-After all the excitement about Medley Global Advisors joining Goldman’s Hudson Street Services platform, we wanted to profile the less-heralded addition of iSuppli Corporation, which quietly announced a minority investment by Goldman Sachs on April 25th.
Background-Hudson Street Services
Goldman’s minority investments in alternative research firms first became public in December 2006 with Goldman’s investment in Asset4, a Swiss-based provider of environmental, social and governance (ESG) research. In March 2007, Investars, which provides research management tools and performance measurement of external and internal research, and Connotate, a search-based primary research provider, announced they had received minority investments. In the past two weeks, iSuppli, a technology industry specialist, and Medley, which supplies central bank policy research, became the fourth and fifth firms to join the Hudson Street platform. Goldman has said that it may invest in up to a dozen alternative research firms.
Each firm on the platform agrees to a distribution agreement with Goldman Sachs. Goldman Sachs uses its institutional sales force to generate leads for the alternative research firms. The leads are pursued by Hudson Street staff and research provider staff. Successful sales are paid for through Goldman’s Research XPRESS commission management platform (assuming the client agrees) and in addition Goldman receives a sales commission, a portion of the research providers’ incremental revenue.
There is another firm which is majority owned by Goldman Sachs private equity arm, Wall Street On Demand, which is enhancing Hudson Street’s Research XPRESS platform to include performance measurement and research distribution for all research providers offered through its commission managment services, not just the research firms with whom Goldman has minority investments.
iSuppli is an industry research firm focused on the technology sector, specializing in providing technology firms market intelligence and metrics on the supply chain. iSuppli maintains databases that track inventories, component pricing, upstream suppliers and downstream customers, and market shares. The clients are predominantly the technology firms themselves, which use iSuppli’s services to develop product and marketing strategies such as which products to build, which to source or which partners to select.
Thanks to the deal with Hudson Street, iSuppli will begin to offer its services to institutional investors. Asset managers will use iSuppli to datamine for investable ideas, similar to how Majestic Research uses the third party databases it licenses. iSuppli has around 70 analysts who can provide investors with insights on market shares, emerging distribution trends and other revenue related insights. iSuppli also does custom consulting.
Instinet, which was one of the first to develop a distribution approach similar to the one Hudson Street is using, has a relationship with IDC, another technology industry specialist. However, unlike Goldman, Instinet does not make minority investments in the alternative research providers.
The iSuppli press release follows:
iSuppli Corporation Enters Strategic Agreement with Goldman Sachs
April 25, 2007
iSuppli Corp., a global leader in technology value-chain market intelligence, is pleased to announce it has entered into a marketing and investment agreement with Goldman, Sachs & Co.’s Hudson Street Services, a platform that gives clients access to providers of unique tools and services.
Hudson Street will offer its clients a platform of services including many of iSuppli’s market-intelligence reports and databases. Goldman Sachs’ clients seeking independent, third-party information on technology value-chain issues will have access to iSuppli’s industry-standard data sets and analysis.
“Since iSuppli’s inception in 1999, the company’s goal has been to improve technology value-chain performance by providing industry-leading market intelligence to all constituencies within the industry, from content providers, to suppliers of materials, to sellers of enabling technologies, to brand-name electronics OEMs,” said Derek Lidow, president and chief executive officer of iSuppli. “Now we’re expanding our reach to serve another important constituency in the industry: the financial community.”
“iSuppli represents the gold standard in the market-intelligence business, with our research upholding the highest principles of quality, consistency, objectivity and independence,” said Lloyd Kaplan, chief operating officer for iSuppli. “We’re proud that an organization as esteemed as Goldman Sachs has selected iSuppli to be a provider of independent, third-party research on the technology, media and communications value chain.”
Hudson Street is designed to give its clients seamless access to unique services and tools from third-party firms that can be integrated into the investment management process. “Our clients are demanding primary, specialized tools and services as they continue to build their own research capabilities. iSuppli has emerged as one of the most influential firms covering technology and we are pleased to introduce their market research to our clients,” said Michael Sanders, managing director, Goldman, Sachs & Co., and head of Hudson Street. “Our clients who consult with iSuppli will get best-in-class market intelligence for display, semiconductor, electronics value-chain and digital-content research.”
Goldman Sachs’ minority investment will enable iSuppli to continue to develop innovative services for new and existing clients.
About iSuppli Corporation
iSuppli Corporation is the global leader in market intelligence services for all segments of the global technology value chain. Services cover technology, media and communications constituents including content providers, operators, component suppliers, systems designers, OEMs, contract manufacturers and retailers. iSuppli affords essential information on the factors determining conditions in the value chain, market shares, technologies, market dynamics, inventories and best practices. iSuppli services range from electronic component research to device-specific application market forecasts, from teardown analysis to consumer electronics and from display device and systems research to multimedia content and services. More information is available at www.isuppli.com.