London Stock Exchange adds to firepower by snapping up asset manager and index compiler Russell Investments

The London Stock Exchange has added to its firepower by snapping up asset manager and index compiler Russell Investments in a record £1.6bn deal.

The UK group hopes the planned purchase will strengthen its position in the market for data and indices in the US, the world’s biggest fund management market.

The LSE has expanded its indices business in recent years as demand for specialist market data has grown on the back of a boom in passive funds. These investments, such as exchange traded funds, blindly track indices – from the FTSE 100 to the price of oil and gas. By owning the intellectual them, exchanges can launch more index products and complex instruments linked to them for investors to trade.

Growth: The LSE hopes the planned purchase will strengthen its position in the market for data and indices in the US

Growth: The LSE hopes the planned purchase will strengthen its position in the market for data and indices in the US

Russell has about £3.1trillion of assets tied to its indices. LSE hopes the deal will enable it to compete with market leaders S&P Dow Jones and MSCI.

The deal, financed by a £940m rights issue, also sets a record for the LSE, trumping the £1.3bn it paid in 2007 for Borsa Italia.

 

Xavier Rolet, chief executive of LSE, said: ‘The acquisition of Russell is another significant milestone for LSE.

‘It sits squarely with our diversification strategy, builds on one of our core strengths in intellectual property and provides another key driver of growth by growing our presence in the US, the largest global financial services market.’

The move was welcome by analysts and investors, with shares jumping 6.1 per cent to 1984p.

Mark Thomas of Edison Investment Research said he expected shares to ‘react well’ as the £1.6bn price tag for Russell was 10 per cent less than expected.

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