Shares in London Stock Exchange Group (LSEG), drifted 0.93% lower to £78.88, despite reports the group has agreed a $1 billion deal to sell its securities execution and post-trade processing services business BETA.

BETA is being acquired by a consortium comprising Motive Partners, a sector specialist private equity firm and Clearlake Capital, an investment firm operating across private equity, credit and other related strategies.

BETA was acquired as part of the Refinitiv deal, and accounts for less than 3% of revenues. It provides outsourced securities and post-trade processing services for small and mid tier wealth managers in North America.

Revenues are linked to transaction volumes and more cyclical than other segments of the Data and Analytics Unit.

ROBUST FULL YEAR RESULTS

The disposal of BETA follows on the heels of better than expected full year results that were announced on 3 March.

Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) of £3.28 billion, was ahead of market expectations, as was earnings per share of 286.7p.

The dividend of 95p per share considerably exceeded expectations of 85p. Net debt to  EBITDA, a measure of leverage reduced to 1.9 times by the end of 2021.

POSTIVE MOMENTUN IN DATA AND ANALYTICS

Within the core Data & Analytics division ASV (Annual Subscription Value) accelerated to 4.6% from 4.0% in 3Q21, reflecting strength in subscription-based new business wins.

This is materially ahead of subscription revenue growth delivered in 2021 (3.5%) and indicates positive momentum in the circa 90% of divisional revenue, which is covered by the ASV metric.

Jefferies analyst Martin Price said the disposal of BETA represents ‘efficient portfolio management as LSEG optimises the assets it acquired with Refinitiv'

' We suspect other small disposals are possible. We estimate £2 billion of headroom by the end of 2022 at 2.5x net leverage which could be tapped for M&A or distributions', added Price.

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Issue Date: 21 Mar 2022