By Sinead Cruise and Chandini Monnappa
LONDON (Reuters) -The London Stock Exchange Group has sold its 4.92% stake in Belgium-based financial services provider Euroclear for 455 million euros ($479 million) as it sharpens its focus on product innovation expected in 2025 by exiting non-core assets.
LSEG sold the stake to TCorp, the financial services partner to the New South Wales government, it said in a statement, ending its five-year minority interest after it bought the stake for 278.5 million euros in 2019.
LSEG did not comment on Thursday on its rationale for offloading the position.
LSEG Chief Executive David Schwimmer had, however, told analysts in October the sub-five percent ownership in Euroclear afforded his firm “no kind of control, no strategic position”, in contrast to the firm’s key post-trade asset, LCH, in which it owns a majority stake.
LSEG shares were broadly unchanged in the wake of the news on Thursday but have risen 22% so far in 2024, extending last year’s near-30% rally.
The FTSE 100 has risen around 7.5% in 2024.
Schwimmer and his executive team have been driving a multi-year transformation of the former exchange operator into a global data and market infrastructure powerhouse since its $27 billion acquisition of Refinitiv in 2021, and have joined forces with Microsoft to accelerate its strategy.
LSEG said in August the partnership was “approaching commercialisation” with the first product set to become more widely available by year-end.
“Growth is needed from the 10-year partnership with Microsoft for next-gen data and analytics and cloud infrastructure in the coming years to justify the current valuation in our view,” HSBC analyst Johannes Thorman said in a note to clients on Dec.
3.
“Although we think the stock is expensive, we maintain Hold due to strong momentum and potential catalysts,” the note added.
Thomson Reuters, the parent company of Reuters, holds a minority stake in LSEG, which is Reuters’ largest news service client.
ALIGNED
Euroclear CEO Valerie Urbain said TCorp’s long-term investment horizon and focus on the Asia Pacific region aligned well with Euroclear’s strategy of “providing more liquid and stable markets for Europe and beyond”.
Euroclear serves around 2,400 financial institutions with a range of domestic and cross-border settlement and custody services across bonds, equities and derivatives.
The group has around 40 trillion euros of assets under custody and enabled 299 million netted transactions in 2023, worth around 1 trillion euros, according to company-supplied data.
“This is another important step in our transition from a user-owned model to one more oriented towards client centricity and long-term shareholder value creation,” Euroclear Chairman Francesco Vanni d’Archirafi said in a statement.
($1 = 0.9501 euros)
(Reporting by Chandini Monnappa in Bengaluru and Sinead Cruise in London. Editing by Janane Venkatraman and Mark Potter)
