Large LSE shareholders support Refinitiv’s additional expense
One of the largest shareholders in the London Stock Exchange Group has called for additional spending to fix long-standing problems with its new $ 27 billion acquisition of Refinitiv, and said the group would have to invest “sooner and sooner if necessary”.
Lindsell Train, which has the largest stake in a group fund manager, told investors it was important to “not lose the strategic benefit of the deal” after LSE shares lost one-fifth of their value last month.
Investors have it worried On the impact of Refinitiv, the LSE said in March that it would incur higher-than-expected costs by integrating data and trading providers and preparing to sell Borsa Italiana to Euronext.
That unexpected announcement had the biggest impact a one-day fall 20 years in LSE shares.
Refinitiv Purchasing, the largest exchange in the history of LSE, has become one of the world’s largest providers of market infrastructure and financial data and is one of the most valuable FTSE 100s.
In one fell swoop, the deal tripled the group’s revenue and increased the number of employees fivefold to more than 25,000.
Buying Refinitiv means taking on the business you had constantly losing over the past decade its market share has gone to Bloomberg and smaller and faster rivals such as FactSet and S&P Global Market Intelligence. Last week, on wide gap In Refinitiv, the Eikon terminal data was not available for several hours.
Last month’s annual results revealed that the LSE would spend billions of euros this year – capital expenditure of £ 850 million and £ 150 million in operating costs – and analysts feared it would achieve the financial goals of the deal.
Lindsell Train has a 4.2 percent stake. The largest stakes are owned by consortia that run Blackstone, Thomson Reuters and Qatar’s sovereign wealth fund.
At a meeting with shareholders after the exchange’s earnings were announced, Lindsell Train said LSE management acknowledged that they knew Refinitiv would need an investment in 2019 when they were working on the deal.
“Part of the investment thesis was based on the knowledge that Thomson Reuters had invested little in certain areas. Given the size and complexity of the business, it should always be uplifted, ”said Nick Train, founder of Lindsell Train, whose comments were published to investors in a monthly appearance.
LSE shares remained a key stake in Lindsell Train’s UK portfolios, “because they are as rare as a major data business in the context of the UK stock market,” he said. The fund house has said it will not add any comments. The LSE said previous market orientations on spending had not changed.
LSE shares rebounded this month, and analysts said higher costs have been in line with market expectations.