Today (August 22nd), London Stock Exchange Group (LSE) revealed its intention of raising almost £1 billion by launching a fully underwritten rights issue in order to fund its acquisition of US firm Russell Investments.
The British bourse’s announcement comes two months after it revealed it had come to an agreement to acquire the US company – an index management and investment management business – from Northwestern Mutual. The LSE hopes the deal will allow it to increase its presence in the US, as this has been identified as a key market.
It confirmed it will raise net proceeds of £938 million in order to part fund it plans to purchase the firm for $2.7 billion (£1.6 billion). The rights issue will see the firm offer three shares for every existing 11 shares.
Each share will be on offer for a price of £12.95, which includes a significant discount of 30 per cent off yesterday’s closing price.
The purchase of Russell Investments will mark the LSE’s biggest even acquisition.
In addition to the rights issue, the bourse reported a 20 per cent increase in revenues for the second quarter of 2014, allowing pre-tax profits to grow from £59.7 million to £83.6 million during the three months to the end of June.
Xavier Rolet, chief executive of the group, said: "This is a strong strategic acquisition for the group, which will accelerate development in one of our core strengths, intellectual property, and offers significant growth potential. We continue to make good progress on obtaining the necessary approvals to complete the acquisition and to deliver the financial benefits of the transaction to the group.”
He added that the bourse had been boosted by the step-up in initial public offerings (IPOs) during the year so far. This resurgence has led to an increase in the number of companies joining UK markets and the amount of money raised.
Although the summer is traditionally a slow period for the stock exchange, Mr Rolet believes the “diversified business” is position well for further growth.
Posted by
Bob Fletcher