London Stock Exchange Group to sell Russell Investments for £752m

Thursday the company said that Reverence Capital Partners partnered with TA Associates, and will make a significant minority investment in Russell Investments.

Global private equity investor TA Associates is teaming with Reverence Capital Partners to acquire the Russell Investments asset management business from the London Stock Exchange Group (LSEG) for $1.15 billion.

Russell Investments owns advice network In Partnership.

Staff in the Australian team have privately expressed elation at the move, owing to the track record of TA Associates in building up fund management groups and for its long term ownership of brands such as Thomson Advisory Group, which it purchased in 1990, which subsequently merged with Pacific Mutual Life Insurance Company to form Pimco, which was sold to Allianz in 2000.

CITIC – one of the biggest brokerage firms in China – was reportedly the frontrunner to take over Russell Investments, before a stock market rout in the Far Eastern country and an alleged investigation into CITC by the government hit it hard.

The Australian team are now passing all media requests to Russell’s Seattle head office.

“We are excited to work with the principals at TA Associates and Reverence Capital, firms we’ve been well acquainted with for many years”, said Len Brennan, Russell’s president and CEO. The company expects to extract about $920 million after expenses from the sale.

The company had originally announced it planned to sell the business in February. This represents an implied multiple of c.18x current year EBITDA for the index operation.

The deal is still subject to customary closing adjustments and regulatory and other required approvals.

“The net cash proceeds of the transaction will be applied to LSEG’s existing net debt, reducing LSEG’s pro forma leverage to approximately 1.6x net debt to EBITDA8, if measured as at 30 June 2015”, the firm said.

LSEG confirms that the separation of Russell Index business from Russell Investments is expected to be completed in the first-quarter 2016. FTSE Russell is the overall operating business for both index offerings. Crockett, Berlinski and Roger Kafker, a managing director at TA Associates, will join the Russell Investments board upon close of the transaction. He will step down from the Executive Committee of LSEG on closing.

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