London Stock Exchange Group announced plans to buy back more of its shares on Thursday as it raised its income growth outlook and hailed the successful integration of Refinitiv, which it said had supercharged its ability to generate cash.
LSEG said it would seek shareholder consent to buy more of its own stock from a consortium of Blackstone and Thomson Reuters from which it acquired the data analytics group for $27 billion in January 2021.
“In addition to our existing share buyback, we are today announcing plans to seek shareholder approval for a buyback directed towards the Blackstone/Thomson Reuters consortium’s stake, which will benefit all shareholders,” LSEG Chief Executive David Schwimmer said in a statement.
The Refinitiv deal transformed the exchange, with data and analytics accounting for 4.944 billion pounds of its total income of 7.743 billion pounds in 2022, eclipsing the sums earned by its traditional activities, including share trading, which go back more than 300 years.
The directed buyback is expected to be up to 750 million pounds by April 2024, LSEG said.
Schwimmer said the consortium owned just over 30% of LSEG shares when the Refinitiv deal was completed. Thomson Reuters, the parent company of Reuters News, owned about $5.6 billion worth of LSEG shares as of Jan 31.
About of 10% of LSEG equity is available for sale by the consortium.
LSEG said 300 million pounds of a separate, broader 750 million pound share buyback was carried out in 2022, with the remainder to be completed by July 2023.
“We see the result as strong enough to keep sentiment for LSEG intact ahead of any potential share disposals over the coming months,” RBC Europe said in a note to clients.
Shares in LSEG, which released preliminary 2022 results in-line with forecasts, traded 1.3% lower.
LSEG’s total income, including recoveries, of 7.743 billion pounds ($9.28 billion) in preliminary results for 2022, was just above analysts’ consensus of 7.733 billion pounds, and up from 6.535 billion in 2021.
“We continue to deliver on all of our key targets,” LSEG chief financial officer Anna Manz told a media call.
LSEG also raised its guidance on revenue synergies from 225 million pounds by 2025 to 350-400 million pounds.
Schwimmer said the integration of Refinitiv and a strategic $2 billion partnership announced with Microsoft in December meant LSEG is “shifting from integration to transformation”.
“We generate a lot of cash,” he told reporters.
Britain is seeking to persuade Softbank-owned UK chip technology company Arm to have a listing in London. The UK has also launched a raft of capital market reforms aimed at helping to close the listings gap with New York.
Schwimmer declined to comment on whether he expected Arm to have a London listing.
“We continue to be very excited about the prospects for this market, it continues the most international capital market and there is a real opportunity to continue to improve it,” Schwimmer said.
Britain’s Financial Conduct Authority on Thursday said competition in some parts of the wholesale data market, which includes prices and volumes traded on stock exchanges, is not working as well as it should, and it was launching a market study.
“It’s an important part of our business, a very competitive market for data on a global basis, so not a concern there,” Schwimmer said.
($1 = 0.8344 pounds)
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