Microsoft to take 4% stake in London Stock Exchange Group

US tech giant to provide data analytics and cloud products in 10-year strategic partnership

Microsoft has agreed to buy a £1.5 billion (€1.74 billion) stake in London Stock Exchange Group (LSEG) as part of a 10-year strategic partnership, marking the latest incursion by Big Tech into the operation of global markets.

Under the agreement, Microsoft will acquire a 4 per cent stake in LSEG worth about £1.5 billion from Blackstone, Thomson Reuters, Canada Pension Plan Investment Board and Singapore’s sovereign wealth fund GIC.

As well as improving the 300-year-old exchange’s data and analytics, the tie-up would “meaningfully” increase LSEG’s revenue growth over time as they developed new products together, the companies said on Monday.

The deal was “far, far different to simply lifting and shifting assets to the cloud”, said David Schwimmer, LSEG chief executive, describing it as “a significant strategic partnership where we’re building products together and accessing markets together”.

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Scott Guthrie, executive vice-president of Microsoft’s Cloud and AI unit, will take a seat on LSEG’s board. The tie-up follows Google’s $1 billion investment in Chicago-based CME in November 2021 as part of a 10-year cloud computing deal, while Nasdaq and Amazon Web Services agreed a similar partnership last year.

The agreement comes as LSEG faces pressure to make its $27 billion acquisition of data and trading group Refinitiv pay off. Schwimmer touted the 2019 deal as a way of transforming the exchange into a global data and analytics company that could compete with the likes of Bloomberg, but integrating the business has proved fraught.

Ben Bathurst, analyst at RBC Capital Markets, said the integration of Teams could mean LSEG’s system “may now become more widely accepted as a credible competitor to Bloomberg”. – Copyright The Financial Times Limited 2022