London Stock Exchange to buy Russell Investments for $2.7 billion

30 June 2014   Category: Asia, Global, USA, Europe, United Kingdom   By Daniel Shane

The London Stock Exchange Group (LSEG) has reached an agreement to buy US indexing and asset management firm Russell Investments from Northwestern Mutual for US$2.7 billion.

LSEG said that the combination of Russell’s indexing capabilities with its own FTSE stable of indices will create the second largest player in the US ETF market. The acquisition will create an entity to which approximately $9.2 trillion in assets are benchmarked to globally, and help LSEG to better compete with rivals including MSCI and S&P Dow Jones indices.

The deal will also enhance LSEG’s information services in the US, and help it to capitalise on trends including multi-asset solutions and passive investment strategies.

“[The acquisition] 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,” commented Xavier Rolet, chief executive, LSEG.

Russell’s asset management business currently has about $256 billion in AUM, and LSEG said that it would “undertake a comprehensive review” of this unit to “determine its positioning and fit within the group”.

LSEG said in a statement that it would fund the acquisition by raising $1.6 billion via a rights issue in September and the remaining $1.1 billion through debt.

Following the completion of the acquisition, Russell’s president and chief executive officer Len Brennan will join the executive committee of LSEG.

The deal is expected is close in September, and is pending shareholder approval.