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You are here: Home / Investment News / Russell sale date pushed out, price expectation revised down

Russell sale date pushed out, price expectation revised down

August 9, 2015

Xavier Rolet: London Stock Exchange chief
Xavier Rolet: London Stock Exchange chief

Russell Investments could remain under the umbrella of the London Stock Exchange (LSE) for some time yet, according to the Financial Times (FT).

In a story published last week, the FT says the sales process has “stalled, despite a months-long process to dispose of Frank Russell Investments”.

“According to two people familiar with the matter, a deal is not expected imminently,” the FT says.

Since the LSE announced this February it would hive off the Russell Investments business, acquired as part of US$2.7 billion purchase of the Frank Russell group in 2014, a number of parties, including most-recently Towers Watson and the Chinese Citic Group, have been tipped as potential buyers.

Following its merger with insurance broking firm Willis Group last month, Towers Watson is understood to have dropped out of the race.

While earlier reports suggested the price-tag for Russell Investments could hit as much as US$1.8 billion, the FT story says analysts “expect the unit to sell for less, about $1.25bn”.

(Last month the FT itself was sold to the Japanese media giant, Nikkei, for about US$1.3 billion.)

However, the FT reports, Xavier Rolet, LSE chief executive, saying the Russell Investments sell-off is “going according to plan”.

“We’re making good progress. We’ve had very strong interest from four continents, a very long list of interested bidders,” Rolet is quoted in the story. “It takes a disciplined process to give each one of these bidders a fair shot to do a disciplined analysis. These things do take a few months.”

Rolet’s comments came after the LSE released its half-yearly results that included strong contributions from both the Russell index business (now merged with the exchange’s own indexing unit, FTSE) and the investments arm.

In the results announcement, the LSE says the both components of the combined FTSE Russell index business had performed strongly over the six months to the end of June with integration of the two “progressing well”.

“Further integration plans are well developed and roll out of the next stages will continue in the months ahead,” the LSE release says. “In the meantime, both Index businesses are performing well: ETF AUM benchmarked to FTSE grew 8% to $230 billion and Russell ETF AUM increased 16% to $159 billion.”

Over the same half-year period, Russell Investments reported income of £498.2 million (or about US$770 million), the LSE release says.

“The Group received a number of expressions of interest in a potential acquisition of the Investment Management business, and we continue to make good progress with the sale process,” the LSE says. “More information will be provided in due course.”

According to the release, the LSE should complete the full separation of the Russell investment and index businesses before the “conclusion of the sale process”.

“In the meantime, Russell Investment Management will continue its focus on client service, growth and innovation,” the LSE says.

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