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LSE to see Russell Investments for $1.15 billion
Posted On Oct 09 2015
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The London exchange operator acquired the asset management business a year ago as part of its larger $2.7 billion acquisition of Frank Russell Co., formerly of Tacoma.
Russell’s investment business generated revenues of £498m.
For Russell, the deal marks the end of a long process of being shopped around. Discussions with CITIC reportedly reached a fairly advanced stage, but were torpedoed by the meltdown in Chinese stock market, thus opening the door again to private equity bidders. That would equate to a purchase price for the Russell index business of about $1.86 billion, the company said.
Private US Investment firm Reverence Capital partnered has joined TA Associates, and will make a significant minority investment in Russell Investments, according to the stock exchange.
Cash from the sale will be applied to the exchange company’s debt.
“We are delighted to partner to partner with such an established and highly respected market leader in the investment management industry”, said Todd Crockett, a managing director at TA Associates.
After the payment by LSEG of tax on gains, principally in the United States, settlement of certain liabilities by LSEG and payment of transaction related expenses, the net proceeds- including earnings from Russell Investments during LSEG’s period of ownership- expected to be received by LSEG will be approximately US$920 million or 601 million pounds. “TA Associates and Reverence Capital have extensive experience in asset management and we consider their decision to invest in Russell Investments a notable endorsement of our leading position in outcome-oriented solutions”.
Len Brennan, president and CEO of Russell Investments, said in a statement that the Seattle-based financial firm will operate independently, and that its new owners will bring “strong financial backing, new strategic insights, and a commitment to help us continue to deliver innovative investment solutions to our global base”. Russell Investments oversees about $266 billion.
