LSE buys minority stake in Euroclear, deepening market infrastructure role

London Stock Exchange Group (LSEG) announced on Wednesday that it plans to acquire a 4.92% stake in Euroclear in a deal valued at £241.9 million.

Euroclear is a major financial market infrastructure company, offering settlement and clearing services across Europe and boasting €28.2 trillion in asset under custody.

‘We are delighted to become a shareholder of Euroclear, with which we have a long-standing operational and commercial relationship,’ CEO of LSEG David Schwimmer said. ‘

‘Both LSEG and Euroclear share the same open access philosophy and a customer partnership approach which is central to our businesses.’

LSEG preps for Brexit with Euroclear deal

The deal comes a little under two months until Britain leaves the EU on March 29, with Brexit, in part, serving as a catalyst behind the move as it threatens to take trading volume away from the London-based exchange.

LSEG’s minority investment is expected to strengthen LSEG and Euroclear’s existing operational and commercial relationship and provide further opportunities for the companies to deliver benefits to their customers through commercial collaboration and product development, the exchange operator said.

Following LSEG’s minority investment in Euroclear, a representative from the exchange operator is expected to join the clearing house’s board.

LSEG keeps pace with rivals

Around 18 months ago, several banks, including Royal Bank of Scotland, sold around a 10% stake in the European clearing house to US-based rival Intercontinental Exchange.

The deal will be financed using a mix of existing cash and debt, LSEG said.

‘The group’s adjusted net debt to EBITDA will remain within its target range of 1-2x following completion,’ LSEG said. ‘The transaction is expected to be earnings accretive.’