London Stock Exchange Group PLC (LSE:LSEG) is selling a 20% stake in its Post Trade Solutions business to 11 global banks in a deal worth £170 million, valuing the unit at £850 million.
The move deepens the group’s ties with its biggest clearing clients and echoes the original model behind its successful LCH clearing house.
The investors, including Bank of America, Barclays, BNP Paribas, Citi, Deutsche Bank, HSBC, J.P. Morgan, Morgan Stanley, Nomura, Societe Generale and UBS, will each become shareholders in Post Trade Solutions.
The business, which provides risk management and optimisation services for the uncleared derivatives market, generated £96 million in revenue and £16 million in earnings before interest, tax, depreciation and amortisation in 2024.
As part of the transaction, LSEG will also increase its share of revenue from SwapClear, its flagship interest rate swaps clearing service.
The banks’ share of SwapClear’s surplus revenue will be reduced from around 30% to 15% for 2025, applied retrospectively to the start of the year, and then to 10% from 2026.
In return, LSEG will pay £1.15 billion in cash, with an additional payment of up to £200 million depending on future growth.
LSEG said the change would boost profitability across its markets division, lifting earnings per share by around 2-3% in 2025, with further improvement expected the following year.
Daniel Maguire, head of markets at LSEG and chief executive of LCH Group, said the deal reflected the same spirit of collaboration that had driven SwapClear’s growth over the past 25 years.
“Our clearing services have been highly successful in generating substantial growth and ensuring robust risk management for the derivatives market,” he said.
“With this proven track record of success, I’m pleased that our partners are committed to continuing the approach with our Post Trade Solutions business.”
Bank executives described the investment as a way to drive efficiency and innovation across post-trade operations.
Jim DeMare of Bank of America said it showed the bank’s “commitment to driving innovation that enhances operational resilience,” while Barclays’ Stephen Dainton said it would “develop innovative solutions that drive material capital and operational efficiencies for the industry.”
The transaction, expected to complete next year, will also give the banks three board seats at Post Trade Solutions, providing direct input into its strategic direction.