An activist investor has recently acquired a substantial stake in the London Stock Exchange Group (LSEG) and is initiating discussions with the company aimed at enhancing its performance amid challenges such as dwindling listings and the looming threat of artificial intelligence disruption. The precise shareholding of the investor remains unclear, although reports indicate that the fund is engaged in talks with LSEG to propose significant improvements and encourage the consideration of a new share buyback program, ultimately seeking to bridge the performance gap with its competitors.
In early trading on Wednesday, shares of LSEG experienced an uptick of nearly 6% before slightly retracting later in the day. While LSEG is primarily recognized for its operation of the London Stock Exchange, recent strategies have shifted towards a greater reliance on its data and analytics divisions, which now constitute nearly half of its revenue following the acquisition of Refinitiv in 2020.
The company faces a challenging landscape as its share price has consistently declined throughout the past year. Investor concerns have intensified regarding potential income pressures from AI innovations amid escalating competition. Over the last 12 months, LSEG shares have plummeted by more than 35%. Notably, earlier this month, shares fell by 13% after the launch of a new tool by the US AI startup Anthropic, which raised fears about the potential impact on LSEG’s data business.
Elliott Management’s interest in LSEG reflects a broader strategy, as it has recently amassed a stake in BP worth approximately £3.8 billion, representing around 5% of the oil company’s shares, thereby becoming its third-largest shareholder. This followed the ousting of BP’s CEO, Murray Auchincloss, after less than two years due to pressures from Elliott, which had also successfully campaigned against the company’s chair earlier in the year.
The activist hedge fund has a history of targeting firms perceived to have lost value due to mismanagement, advocating for changes aimed at enhancing their market valuation. Prior engagements have included calls for restructuring at firms such as GSK and Taylor Wimpey.
Additionally, Elliott is known for its ownership of the combined Waterstones and Barnes & Noble bookstores, and is reportedly preparing for a public listing of these entities. The fund is believed to favor a London listing, which would be seen as a positive development for the UK stock market.
While there has been a resurgence in the number of businesses opting for listings in London in the latter part of the year, concerns linger regarding the overall decline in the number of public companies in the UK due to takeovers and delistings. Both LSEG and Elliott Management have chosen not to comment on these developments.
