Elliott goes public on LSEG, calls for more action after record buyback 

By Anousha Sakoui, Yadarisa Shabong and Charlie Conchie

Feb 27 (Reuters) - Elliott Management called for more "value enhancing" actions from London Stock Exchange Group on Friday as the investment manager went public for the first time about its shareholding in the British company.

The activist investor said it held a "significant stake" in LSEG, without disclosing its size, and said LSEG's 3 billion pound ($4.05 billion) share buyback, margin-improvement plans and improved communication on its AI strategy, announced on Thursday, were a "positive first start."

"Elliott looks forward to maintaining a constructive dialogue with LSEG as the company works to realise the full potential of its market-leading assets, close the valuation gap to industry peers and generate long-term value," the New-York based fund said in a statement.

Elliott has not previously spoken publicly about its LSEG holding, which was revealed earlier this month.

“LSEG maintains an active and open dialogue with our investors, while remaining focused on executing our strategy,” an LSEG spokesperson said.

The move keeps up pressure on LSEG, home to the London Stock Exchange, which has lost 23% of its market value over the last year as the data and exchanges group has been hit by concerns that AI will impact its business.

On Thursday LSEG said it would buy back 3 billion pounds of shares and provided forecasts that pleased investors. This sent its shares 9% higher, their biggest one-day gain since March 2022.

But Elliott had pressed CEO David Schwimmer for a 5 billion pound buyback, a review LSEG's portfolio, lift margins that trail rivals, and better communicate its resilience to AI threats, a person familiar with the matter previously told Reuters.

Other shareholders told Reuters they welcomed the buyback and saw the potential for more action. 

"We welcome the buyback but you don't invest in LSEG because you hope for buybacks and a dividend. We want growth," said Stephen Yiu, chief investment officer of the Blue Whale growth fund, an LSEG shareholder told Reuters on Thursday.

"It will have bought them time with Elliott but the clock is ticking and you can expect Elliott will come through more forcefully if LSEG doesn't deliver in the next few quarters."

LSEG executives said the buyback was not a response to Elliott and the group had no plans for asset sales. It is considering acquisitions, executives said Thursday.

Frederick Kerr-Smiley, analyst at Ninety One, a top-20 LSEG shareholder, said the company could increase the buyback if they have not bought anything by the third quarter.  

Reuters provides news for LSEG's news and data terminal, Workspace, and other products.

($1 = 0.7416 pounds)

(Reporting by Anousha Sakoui and Charlie Conchie in London and Yadarisa Shabong in Bengaluru; Editing by Rashmi Aich, Janane Venkatraman and Jane Merriman)