LSE Shares to Benefit from Frank Russell Deal

LSE's success will ride in good part on its ability to capitalise on recent and planned acquisitions – in indexes and clearing – to help fuel growth, say equity analysts

Stephen Ellis 2 April, 2015 | 3:33PM

Descended from 17th century London coffeehouse traders, today’s London Stock Exchange Group (LSE) is a major player among bourse operators. In our view, LSE's success will ride in good part on its ability to capitalize on recent and planned acquisitions – in indexes and clearing – to help fuel growth. We see LSE as poised to remain a competitive force in the continuously evolving exchange industry.

We expect LSE's information-services segment to continue providing the largest slice of overall revenue. Steady growth should be fed by appetite for index-based offerings, which are included in the segment's FTSE operations. In our view, the FTSE business, now fully owned by LSE, has an opportunity to build on the momentum of its selection as a benchmark provider to more than $200 billion of assets at Vanguard. We think the glow from this victory should help position FTSE to compete even more effectively going forward.

Indeed, indexes are going to become an even larger business for LSE, with the acquisition of Frank Russell Co. and its suite of index products. Separately, we also see potential in LCH Clearnet, in which LSE now owns a majority stake. We think this operation has interesting prospects, as clearing grows in importance, but we do have some concerns about recent customer losses and the business has been through a managerial transition.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Stephen Ellis  Stephen Ellis is a senior stock analyst on the Energy Team.

Audience Confirmation

By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites
© Copyright 2020 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies