Elliott Investment Management is pressing London Stock Exchange Group Plc to launch a review of its portfolio and pursue a £5 billion ($6.8 billion) share buyback over the next 12 months, according to people familiar with the matter.
Paul Singer's activist hedge fund is calling on LSEG to review its complex structure, which spans a data business, exchange operations and a 51% stake in US-listed Tradeweb Markets Inc., the people said, asking not be identified discussing confidential information.
Shares of LSEG have been hit recently amid a broad selloff in businesses at risk of disruption from artificial intelligence. Elliott would like LSEG to improve its efforts to educate investors on how it could be a beneficiary of AI, with the idea that its sticky data business would actually see more demand from AI applications while its markets unit is largely immune, the people said.
Elliott is also calling on the company to improve its margins and close a gap with peers through operational improvements, the people said. LSEG trades at a discount to data firms such as S&P Global Inc., Moody's Corp. and MSCI Inc., as well as exchange operators such as CBOE Global Markets Inc., CME Group Inc., Intercontinental Exchange Inc. and Nasdaq Inc.
The activist investor sees LSEG as a strong business that's been misunderstood by the market, given its market-leading positions in clearing complex derivative instruments, a FTSE 100 index business that's gaining from the shift to passive investing, and proprietary data that's used for banks and asset managers in functions such as regulatory reporting, the people said. Elliott isn't pushing for a sale of LSEG or a spinoff of its historic bourse business, the people said.
A spokesperson for Elliott declined to comment.
"LSEG maintains an active and open dialogue with our investors, while remaining focused on executing our strategy," a representative for LSEG said in a statement.
LSEG, traditionally an exchange operator, transformed itself into a data business with its landmark $27 billion acquisition of Refinitiv in 2021. Data and analytics accounted for more than 40% of the company's revenue in its last earnings report. Meanwhile, its exchange business has experienced a plunge in the volume of initial public offerings that's seen it slide out of the ranks of the world's top IPO destinations.
Now some investors are concerned that AI technology, such as Anthropic PBC's newly released automation tools, will hurt LSEG's data business. But some analysts have questioned that view, arguing AI models would still need access to the underlying LSEG data. What's more, LSEG has also forged AI partnerships with companies including Microsoft Corp., Anthropic and OpenAI in a bid to future-proof itself.
This is Elliott's second-biggest UK campaign in about a year. The activist investor has been pushing for changes at BP Plc after having built up a stake of about 5%.
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