Heading into results from London Stock Exchange Group PLC (LSE:LSEG) next week, the company has something in common with hot-topic chatbot ChatGPT – they both have recently attracted investment from Microsoft.
The US tech giant took a stake of just over 4% in the UK bourse operator last month, alongside a partnership agreed in December involving next-generation data and analytics, as well as cloud infrastructure.
It follows LSEG’s purchase of financial data dynamo Refinitiv for US$27bn in early 2021 to super-power its existing Data & Analytic arm.
Investors will be most interested in how this business has done in the past year, especially as the other parts of the group have been held back by a lack of IPOs, with numbers of London new issues having plunged 90%.
Last quarterly results from LSEG were provided back in October, when income growth was reported across all divisions, helped by the weak pound.
Analysts at UBS not long ago removed the stock from their buy list after the pound’s recovery and due to concern about the upcoming stock overhang as the lock-ups on the 35% stake held by Blackstone/Thomson Reuters from the Refinitiv deal begin to unlock.
Some of that overhang was reduced with Microsoft’s purchase of shares from former Refinitiv shareholders, but UBS said the market will “closely follow whether Blackstone will place some of the c10% of LSEG shares that were unlocked in late January”.
Like with ChatGPT, investors will also be interested to hear what interesting things boss David Schwimmer will say, especially regarding the planned allocation of the excess cash the company is expected to generate in 2023.