LSE Group eyeing bid for indexing giant Russell

May 13th, 2014 | By | Category: ETF and Index News

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The London Stock Exchange Group (LSEG) has confirmed that it is evaluating the merits of a potential bid for Russell Investments.

LSE Group eyeing bid for indexing giant Russell

The London Stock Exchange Group has confirmed that it is evaluating the merits of a potential bid for Russell Investments.

Following press speculation, the group confirmed in a press release that it was engaged in discussions with the Northwestern Mutual Life Insurance Company, the parent company of Russell.

LSEG is the owner of FTSE Group, a leading index provider, and is understood to be interested in acquiring Russell primarily for Russell Indexes, the company’s vast indexing business. FTSE is best known for the FTSE 100 Index, or “Footsie”, the blue-chip benchmark of London-listed stocks.

Russell Indexes is one of the leading providers of indices to the fast-growing exchange-traded funds industry, with more than $150 billion in assets invested in Russell-linked ETFs. A wide variety of ETFs are based on Russell indices, the largest of which is the NYSE Arca-listed iShares Russell 2000 ETF (IWM), which has more than $24 billion in assets.

Bolting on Russell’s index unit, which generated about $200 million in pre-tax cash earnings last year and whose US indices alone have more than $5.2 trillion in assets benchmarked to them, would catapult LSEG into the very top echelon of index providers alongside S&P Dow Jones Indices and MSCI.

According to press reports, MSCI is also understood to be considering a bid.

In addition to FTSE Group, LSEG is the major shareholder in FTSE TMX Global Debt Capital Markets, an index-oriented joint venture with TMX Group, and owner of MTS Indices, whose indices track the performance of the largest and most widely traded government issued securities in European bonds.

If LSEG were to be successful in its acquisition of Russell, it would mark the group’s largest purchase since it acquired the remaining 50% stake in FTSE from Pearson, owner of the Financial Times, in 2011.

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