London Stock Exchange Group to increase its stake in LCH Group to over 80%

Maria Nikolova

The Exchange has entered into agreements with certain minority shareholders of LCH to acquire up to a further 15.1% of LCH’s share capital.

London Stock Exchange Group Plc (LON:LSE), or LSEG, has just announced that it is in the process of acquiring further shares in LCH Group Holdings Limited, a group of leading global multi-asset clearing houses. The move is set to increase LSEG’s majority ownership of what it sees as a valuable strategic business.

LSEG says it has entered into agreements with certain minority shareholders of LCH to acquire up to a further 15.1% of LCH’s share capital which is expected to take its majority ownership to over 80%, subject to the pre-emption process contained within LCH’s Articles of Association.

In terms of financial details, LSEG explains that the total cash consideration payable by LSEG will be up to a maximum of €438 million (£384 million). The Acquisitions will be funded from cash and existing debt facilities at closing and will be accretive to earnings following completion. Subject to regulatory non-objection, the Acquisitions are expected to close before the end of 2018.

The Acquisitions follow on from previous minority acquisitions by LSEG in late 2017 and early 2018, in line with LSEG’s strategy of increasing its majority ownership while re-affirming its commitment to LCH’s customer partnership model with 14 minority shareholders remaining. The following LCH shareholders are selling shares but will retain minority shareholdings in LCH: Bank of America Merrill Lynch, Barclays, JP Morgan, Morgan Stanley and Societe Generale. The following LCH shareholders are selling their entire stakes in LCH: Borsa Istanbul, CFT & Viel & Cie, Commerzbank, Deutsche Bank, Nasdaq and Nomura.

Also today, LSEG published its key financial and operating metrics for the third quarter of 2018, with Information Services and LCH both delivering good year-on-year growth. LCH income was up 15% (up 15% at constant currency), driven by 12% revenue growth in OTC clearing, with strong volumes at SwapClear and ForexClear also contributing to 49% growth in net treasury income.

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