London Stock Exchange expresses interest in Russell takeover
The London Stock Exchange Group (LSEG) has confirmed its interest in purchasing Russell Investments from current owner Northwestern Mutual.
The US insurance company has owned Russell since 1999, including its index, consultancy and asset management businesses.
LSEG, and its FTSE International brand, would be most interested in the purchasing of Russell’s index business, which may roughly equate to a third of its expected value.
The essential merging of the FTSE and Russell indices would give the firm a strong foothold in the US index market, currently dominated by S&P in the large-cap area.
However, around 98% of all small-cap investments are associated with the Russell 2000 index, a flagship offering.
The confirmed interest from LSEG could be met by a rival bid from MSCI, the global index provider, and other potential private equity firms.
MSCI, while a major name in the global index market, has little foothold in US offerings.
Both index providers would not necessarily want to purchase the entire Russell business, which is mainly made up of investment management and consultancy.
Russell currently provides asset management services, in particular multi-manger options, to both institutional and retail clients, with around $260bn (€190bn) under management.
It also offers investment consultancy and fiduciary management services to pension funds.
In a statement, LSEG said it was evaluating the merits of purchasing Russell Investments, and that it had entered discussions with the Northwestern Mutual Life Insurance Company.
“Discussions remain ongoing, and there can be no certainty that any transaction will be forthcoming,” the group said.
“If a transaction were to proceed, LSEG would intend to part-fund it through an equity raise.”
Any potential bid could also see a partnership between one of several rival index organisations and private equity investors.
This would result in Russell’s asset management and consultancy going to private equity, and the index to LSEG or MSCI.
One source, with knowledge of the matter, suggested Warberg Pinkus and the Canadian Imperial Bank of Commerce as potential suitors to the asset business.