London Stock Exchange Group (LSE: LSE) reported a 26% increase in Q1 adjusted pretax profit to £130m. Revenue increased by a fifth to £300m (excluding currency), driven by a resurgent IPO market with double the number of new issues on the same period last year. Capital Markets revenue increased by £12m to £87m, and there are no signs yet of a slowdown in companies seeking to raise capital on financial markets.
In a separate announcement, the London Stock Exchange Group confirmed a fully underwritten rights issue to fund the proposed acquisition of Russell Investments, the American asset manager. This “will help to expand the global footprint of the group, particularly in the key US market”, the LSEG chief executive, Xavier Rolet, said.
LSEG intends to raise net proceeds of around £938m to fund part of the cash consideration, and shareholders will be offered 3 shares for every 11 existing shares at 1,295p.
Russell Investments boss Lee Brennan said: “LSEG and Russell are two of the most highly respected financial services firms in the world, and this joining of the two organisations offers many strategic benefits. The combination of our index business with the FTSE creates a truly global index leader”.
London Stock Exchange Group shares added 5p to 2,010p in early trade. The shares have risen 16% in 2014, which compares favourably to the FTSE All-Share’s microscopic 0.2% rise.
Of course, many investors make the critical mistake of buying after the best gains have already been made. It’s up to you, then, to decide whether the shares still represent fair value.
