Activist investor Elliott builds up stake in LSEG
Activist investor Elliott Management has built a significant stake in the London Stock Exchange Group as it looks to engineer a turnaround for the stock exchange operator.
The hedge fund has been holding conversations with David Schwimmer, LSEG’s chief executive, according to a report in the Financial Times. The size of the stake could not be determined.
LSEG’s shares are down by over a third in the last year, and have faced heavy selling pressure in recent weeks amid concerns that AI could undermine the business model for many data and software companies. The firm’s total market capitalisation stands at around £37bn.
Since LSEG’s £22bn acquisition of Refinitiv in 2019, its financial data has been a much more lucrative part of the business than its traditional role as operator of the stock exchange.
Many analysts are worried that AI could undermine the subscription-based model for data and analytics business. “While AI-driven disruption will vary across the sector, it’s a structural challenge to existing software economics,” analysts at S&P Global said in a report earlier this week.
It has also suffered from the dearth of new listings on the stock exchange in the last few years as well as the increasing number of firms leaving the UK’s public markets. Last year the UK slipped out of the top 20 destinations for IPOs worldwide.
Elliott took a large stake in BP last year, pushing for major changes at the oil giant, including a renewed focus on oil and gas as well as deep cost cuts.
It has previously pushed through aggressive overhauls at the likes of Starbucks, Waterstones and the budget domestic US carrier Southwest Airlines, where it got into a lengthy spat with the travel group’s leadership over sweeping changes to its board.
However, the FT reported that Elliott would not push for LSEG to consider a spin-off of its stock exchange business.
LSEG declined to comment. Elliott was contacted for comment.