June 27--The London Stock Exchange has added to its firepower by snapping up asset manager and index compiler Russell Investments in a record pounds sterling 1.6bn deal.
The UK group hopes the planned purchase will strengthen its position in the market for data and indices in the US, the world's biggest fund management market.
The LSE has expanded its indices business in recent years as demand for specialist market data has grown on the back of a boom in passive funds. These investments, such as exchange traded funds, blindly track indices -- from the FTSE 100 to the price of oil and gas. By owning the intellectual them, exchanges can launch more index products and complex instruments linked to them for investors to trade.
Russell has about pounds sterling 3.1trillion of assets tied to its indices. LSE hopes the deal will enable it to compete with market leaders S&P Dow Jones and MSCI.
The deal, financed by a pounds sterling 940m rights issue, also sets a record for the LSE, trumping the pounds sterling 1.3bn it paid in 2007 for Borsa Italia.
Xavier Rolet, chief executive of LSE, said: 'The acquisition of Russell is another significant milestone for LSE.
'It 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.'
The move was welcome by analysts and investors, with shares jumping 6.1pc to 1984p.
Mark Thomas of Edison Investment Research said he expected shares to 'react well' as the pounds sterling 1.6bn price tag for Russell was 10pc less than expected.
(c)2014 Daily Mail (London, )
Visit the Daily Mail (London, ) at www.dailymail.co.uk/home/index.html
Distributed by MCT Information Services