The London Stock Exchange Group said its planned $2.7bn purchase of Russell Investments, the US indices compiler, was ahead of schedule and likely to close in the coming weeks.
The LSE had expected the deal to be completed early next year but it has already completed a rights issue to help fund the purchase, while the deal has also been cleared by UK competition authorities.
The deal for Russell, which provides indices that are widely used by US institutional investors for equities and exchange traded funds, is expected to result in a profound shift in the LSE’s business as around a third of its turnover will come from North America. It will also deepen its push into the provision of benchmark data to investors.
The UK bourse said a review of Russell’s accompanying investment management business would be completed after the purchase had been concluded. Analysts have suggested it could be worth as much as $850m.
However, some market participants have had concerns that an active investment unit could represent a conflict of interest with the bourse’s role as key independent provider of market data and information.
For the six months to September 30, the LSE said turnover rose 18 per cent to £592.6m. Total income, which includes net treasury income from its clearing operations, rose 13 per cent to £642.5m. Pre-tax profit rose from £116m to £136.8m. It also confirmed the interim dividend would rise 4.3 per cent to 9.7p, adjusting for the September rights issue.
Shares in the LSE rose 1.1 per cent to £20.31 at the open.
Revenues from its capital markets business rose 13 per cent to £164.6m on the back of a buoyant period for listings. However, it added that capital markets had been more volatile since the year-end and the rate of initial public offerings had slowed compared with the first half of the year.
“The Scottish referendum and wobble last month created a note of uncertainty for issuers that caused them to postpone their plans,” said Xavier Rolet, chief executive. However, he added that Thursday’s listing of Virgin Money would probably kick-start a lot of larger IPOs coming to the market.
Its LCH.Clearnet clearing business, in which the LSE took a controlling stake last year, reported a 49 per cent increase in revenues in the period. Mr Rolet added that he welcomed the recent move by the Bank of England to allow LCH to access its sterling monetary framework in times of market stress. “It brings the UK into line with common practice elsewhere,” he said. LCH is the world’s largest clearer of interest rate swaps.
The figures are the second set of interim results in three months as the UK bourse switches its year-end from March to December.
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