LSEG shares soar on trade services stake sale, stock buyback

By Pushkala Aripaka and Charlie Conchie

(Reuters) -London Stock Exchange Group said on Thursday it would sell 20% of its post-trade services business and surprised investors with a 1 billion pound ($1.34 billion) buyback as it also hinted at a deeper push into private markets data.

Shares in LSEG rose by as much as 9% after the announcements from the London Stock Exchange operator, which also reported better-than-expected third-quarter results on Thursday.

LSEG, whose stock price has fallen by more than 15% this year, has been battling concerns that rising competition and artificial intelligence will squeeze its income.

It has responded by expanding its offerings to meet demand and in a call with investors, LSEG CEO David Schwimmer played down the threat of AI and suggested the company could push deeper into private markets in future.

"For those who think AI models can scoop up so-called public data from the internet and displace us, that ... fundamentally ignores the non-replicable nature of the vast majority of our data," Schwimmer said.

"There's more to come in terms of our ability to provide incremental, value-add and in some cases, unique, private markets data," he said, adding: "So I can comfortably say, watch this space".

Schwimmer's comments follow a series of bumper deals in the private market data industry, including Blackrock's 2.55 billion pound ($3.2 billion) Preqin purchase last year and S&P Global's $1.8 billion acquisition of With Intelligence last week.

BANKS TAKE POST TRADE SOLUTIONS STAKE

A group of 11 banks, which are also among the founding members of LSEG's SwapClear, are buying 20% of Post Trade Solutions for 170 million pounds and will also nominate three directors to the unit's board.

The deal values the whole of Post Trade Solutions, which supports risk management and efficiency for uncleared derivatives, at 850 million pounds, LSEG said in a statement.

LSEG said it will also receive more surplus cash from SwapClear, which it jointly operates with the 11 banks to provide clearing services for interest rate swaps.

The share of SwapClear income going to the banks will be cut this year to 15% from 30%, and then to 10% from 2026, LSEG said.

Daniel Maguire, head of markets for LSEG and CEO of LCH Group, denied the deal was a response to recent weakness in LSEG's shares and said it had been under discussion for more than two years.

RESULTS BEAT EXPECTATIONS

LSEG's third-quarter income and recurring revenue beat market expectations as it raised its 2025 margin forecasts.

Its annual subscription value (ASV), a metric closely-watched by analysts, is expected to accelerate into the end of the year after slowing slightly to 5.6% at the end of the third quarter, LSEG said.

LSEG's third quarter total income grew by 6.4%, excluding recoveries, better than the 5.2% forecast in a company poll.

Reuters provides news for LSEG's Workspace product.

($1 = 0.7451 pounds)  

(Reporting by Pushkala Aripaka in Bengaluru; Charlie Conchie in London; Editing by Tommy Reggiori Wilkes, Susan Fenton and Alexander Smith)