LSE to sell Russell Investments for $1.15bn

London Stock Exchange Group Plc agreed to sell Russell Investments, its asset management business, to private equity firms TA Associates and Reverence Capital Partners for $1.15 billion.

“We are delighted to partner with such an established and highly respected market leader in the investment management industry”, said Todd Crockett, managing director at TA Associates.

The original asking price when LSE put Russell up for sale was $1.4 billion, but when a proposed deal with Chinese brokerage Citic Securities Co. fell through last month in the wake of woes on the Chinese stock market-including allegations about a few of Citic’s executives-TA stepped into the breach.

Reverence Capital Partners, another private equity house, has also partnered with TA Associates in the deal and will take a “significant minority” interest in Russell Investments.

Founded in 1938, Russell Investments has approximately $272.6 billion in assets under management and is one of the few firms to offer actively managed multi-asset portfolios and services that include advice, investments and implementation.

Russell is expected to maintain its operational independence, with its new owners providing “strong financial backing, new strategic insights, and a commitment to help us continue to deliver innovative investment solutions”, Brennan continued. As at the end of the half year Russell Investments had gross assets of USD1.85 billion, and liabilities of USD752 million.

The firm itself has more than $1.85 billion in assets.

‘Until completion, LSE remains firmly committed to Russell Investments’. The company expects to extract about $920 million after expenses from the sale.

LSEG said it plans to use the net proceeds from the sale to pay down debt. As stated at LSEG’s interim results on 5 August 2015, the Board intends to provide an update on capital allocation, including its longer term dividend policy at the time of the preliminary results for 2015, expected to be in March 2016. They can now move on and focus on the cost synergies and growth opportunities of Russell’s index business. FTSE Russell is the overall operating business for both index offerings.

LSE was advised on this deal by JP Morgan and Goldman Sachs.