The story behind S&P Global’s $550 million deal to buy hot Wall Street AI startup Kensho (SPGI)

It started with a project to modernize S&P Global‘s search capabilities.

S&P Global, the financial analytics company behind the S&P index, on Wednesday announced a deal to acquire buzzy Wall Street AI startup Kensho in a $550 million deal. Business Insider caught up with S&P Global chief executive Douglas Peterson to get the story behind the deal.

He told Business Insider that S&P Global decided to buy Kensho, which was founded in 2013 and is backed by the likes of Google Ventures and Goldman Sachs, after working with them on a few projects. Here’s Peterson:

One of them related to how we can upgrade, or modernize our search capabilities. The second one was a very specific project using artificial intelligence, looking at the variables that can be indicators of credit risk. Think about how different types of variables can forecast a recession of market downturn. Those can be announcements around unemployment levels, or energy usage, industrial output. Their technology looked at the massive amount of data we have to find variables that people have historically missed. It was a revealing project that got us to see the quality of Kensho’s people.

The difference between Kensho and other startups S&P Global has worked with or invested in, according to Peterson, is the fact they’ve moved far beyond the idea-stage.

“They’ve actually delivered things. There are a lot of startups, many are impressive, but they’ve never built products to scale. Kensho has delivered to the major investment banks. It’s not just ideas. And that’s when it becomes real innovation, when a startup creates something that is bringing in revenue and being delivered to clients.”

The transaction is subject to regulatory approval, but is expected to close in 2018.