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Activist hedge fund Elliott Management has built up a significant stake in London Stock Exchange Group as the UK company grapples with fears of disruption from AI and a weak listing market.
Elliott is joining LSEG, led by Chief Executive David Schwimmer, to help improve the group’s performance, according to people familiar with the matter.
LSEG shares, which have fallen by more than a third over the past year, were caught up in a widespread selloff of data and software companies last week amid fears that new AI tools will undermine their business models.
The investment represents Elliott’s latest significant bet on a blue-chip UK company, as the hedge fund pushes for sweeping changes at oil major BP and remains a big investor in mining group Anglo American. LSEG had a market value of around £38 billion at Tuesday’s close.
The exact size of the stake could not be ascertained. Elliott and LSEG declined to comment.
Elliott, run by billionaire Paul Singer, has $76 billion in assets under management. Ahead of the release of LSEG’s annual results later this month, Elliott has encouraged the company to consider launching a multibillion-pound share buyback after the £1bn tranche is completed and focus on narrowing the gap on margins compared to rivals, the people said.
LSEG’s valuations lag behind rivals such as Moody’s and CME Group by multiples.
Although LSEG is best known as a stock exchange operator, the group’s £22bn acquisition of Refinitiv in 2019 transformed it into a financial data and analytics powerhouse. It also has a stake of around £10bn in electronic trading platform Tradeweb.
Elliott has previously pushed companies to simplify their corporate structures to boost performance. However, Elliott does not want LSEG to consider a full sale or spin-off of its stock exchange business, the people said.
The exchange has been hit by the exit of a number of companies from its blue-chip FTSE 100 index in recent years, as businesses look to tap the deep pool of capital in the US. Meanwhile, LSEG’s data and analytics business faces growing concerns over the threat from AI.
LSEG shares fell sharply last week amid a selloff in software and data stocks following the launch of a new suite of AI tools from Anthropic. But its shares have since pared some of their losses.
JPMorgan analysts said in a note last week that fears over the impact of AI on LSEG’s business model were “unwarranted”, pointing to a partnership struck last October between LSEG and Anthropic, which will feed LSEG’s data into the start-up’s cloud app.
