By Pushkala Aripaka
(Reuters) -The London Stock Exchange Group said on Thursday it would sell 20% of its post-trade services unit and announced a surprise 1 billion pound ($1.34 billion) buyback alongside better-than-expected third-quarter results.
The announcements sent the group’s struggling share price up 8%.
LSEG, which operates the London Stock Exchange and provides data and analytics, has been battling investor concerns that rising competition will squeeze its income, with its shares tumbling 20% this year. It has responded by expanding its offerings to meet demand driven by AI, cloud adoption, and market volatility.
A group of 11 banks are buying the stake in Post Trade Solutions for 170 million pounds, and LSEG will retain ownership of the rest.
Under the agreement, LSEG will also receive more surplus cash from the SwapClear unit, which it jointly operates with the 11 banks.
Shares in LSEG were on track for their biggest one-day gain in more than three years.
“We expect the market to react positively to the news that management are being active in deploying capital and opportunistic in acquiring shares,” RBC Capital Markets analysts said.
RESULTS BEAT EXPECTATIONS
The banks investing in the clearing unit are among the founding members of SwapClear. The banks’ share of SwapClear’s income will be reduced this year to 15% from 30%, before being cut further to 10% from 2026, LSEG said.
SwapClear provides clearing services for interest rate swaps, while Post Trade Solutions supports risk management and efficiency for uncleared derivatives – a type of financial contract for assets.
The banks will nominate three directors to join Post Trade Solutions’ board.
LSEG also reported third-quarter income and recurring revenue that beat market expectations, while raising its margin forecasts for the year.
It said growth in annual subscription value (ASV), which is closely watched by analysts, would accelerate into the end of the year, after it slowed slightly to 5.6% at the end of the third quarter, on an organic constant currency basis, from 5.8% at the end of June.
The company posted growth of 6.4% in total income, excluding recoveries, for the third quarter, better than the 5.2% expected in a company poll.
Reuters provides news for LSEG’s flagship news and data terminal Workspace.
($1 = 0.7451 pounds)
(Reporting by Pushkala Aripaka in Bengaluru; Editing by Mrigank Dhaniwala, Tommy Reggiori Wilkes and Susan Fenton)
