Rolet on a roll

26 June 2014 By Swaha Pattanaik Follow @swahapattanaik

The UK exchange’s $2.7 bln purchase of the U.S. index provider is complementary and brings welcome new geographical reach. That justifies the market’s relaxed reaction to an accompanying $1.6 bln cash call. But Russell’s fund business doesn’t fit. Its future needs to be resolved.

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The London Stock Exchange Group said on June 26 it had agreed to acquire U.S.-based asset manager and stock index provider Frank Russell for $2.7 billion, funded partly by a $1.6 billion rights issue.

The LSE said the deal, which requires approval from regulators and shareholders, would create a world leader in index services, with around $9.2 trillion of benchmarked assets, and the second-biggest player in U.S. listed exchange-traded funds (ETFs).

The LSE said it will review Russell’s investment management business, which has $256 billion in assets under management, to work out its positioning in the company.

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