London Stock Exchange (LSE) is reopening negotiations with previous bidders for Russell Investments as a mooted deal with Citic Securities looks set to collapse, Bloomberg reported last week.
According to the Bloomberg report, an almost 60 per cent slump in the value of Shanghai-listed Citic shares this year and a high-profile Chinese investigation into the firm had put the Russell Investments acquisition at risk.
LSE officially put Russell Investments on the block in February this year with Citic emerging as front-runner in July, reportedly bidding US$1.8 billion for the firm.
The UK firm paid US$2.7 billion to buy the Frank Russell group in 2014 primarily for its index business, which it has subsequently merged with its existing FTSE index business to form ‘FTSE Russell’.
Russell Investments reportedly attracted a wide range of interested parties including Chinese investment and online gaming business, Shanda, as well as global consultancy firm, Towers Watson. The Canadian Imperial Bank of Commerce and a couple of private equity firms were also tipped as early bidders for the Russell Investments business.
It is understood Citic, China’s biggest listed brokerage firm, took over as preferred bidder for Russell after Towers Watson embarked on a merger with global insurance broker, Willis, in June.
However, tumbling Chinese stock markets combined with a government investigation into the firm had put Citic under pressure, the Bloomberg report says.
“Citic Securities has become a focal point of a campaign by the Chinese authorities to root out financial wrongdoing and assign blame for the nation’s $5 trillion stock rout,” Bloomberg says. “President Cheng Boming is being investigated by the police, with the state-run Xinhua News Agency reporting that he’s one of seven Citic Securities executives facing probes for offenses including alleged insider trading.”
However, the Bloomberg report says while LSE has reopened discussions with previous bidders for Russell, it hasn’t “completely shelved” a deal with Citic.