The London Stock Exchange Group (LSEG) announced this Wednesday that it will acquire an aggregate stake of 4.92 percent in the share capital of Euroclear for €278.5 million (£241.9 million).
The minority investment by LSEG will be funded from existing cash and debt facilities, the statement said. Despite the purchase, the Group still forecasts that its EBITDA will remain within its target range of 1-2 times once the transaction is completed.
According to the statement released today, LSEG expects the minority investment will strengthen its partnership with Euroclear, a financial market infrastructure company which provides settlement and customer services in Europe. As of December 31, 2018, the settlement services provider had €28.2 trillion in assets under custody.
Already the two companies have an established operational and commercial relationship, however, LSEG believes going forward, the two companies will be able to deliver benefits to their customers through the further development of this relationship. The statement does not specify when the transaction is expected to close.
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Commenting on the announcement, David Schwimmer, the Chief Executive Officer of LSEG, said: “We are delighted to become a shareholder of Euroclear, with which we have a long-standing operational and commercial relationship.”
“Both LSEG and Euroclear share the same open access philosophy and a customer partnership approach which is central to our businesses. We look forward to working with Euroclear to drive continued innovation and efficiencies for the benefit of our customers and the wider market.”
Once the transaction is completed, both Euroclear and LSEG expect that a representative from LSEG will join the Board of Euroclear Holding SA/NV. However, no specific details as to who this will be or when it will occur have been provided.
Societe Generale sells part of its stake in Euroclear
The deal between LSEG and the settlement services provider follows on the heels of Societe Generale announcing that it had sold a part of its stake in the company, towards the end of last year as Finance Magnates reported. A statement released by the French investment bank at the time indicated that it had sold 2.05 percent of Euroclear to SFPI-FPIM – a holding and investment company owned by the Belgian government.