London Stock Exchange Group Plc is considering a purchase of Russell Investments Ltd., the indexing and fund-management unit of Northwestern Mutual Life Insurance Co., to expand its FTSE International Ltd. business.
“LSEG confirms that it is evaluating the merits of a potential transaction involving Russell and is engaged in discussions with the Northwestern Mutual Life Insurance Company, the parent company of Russell,” LSE said in an RNS statement today. “Discussions remain ongoing and there can be no certainty that any transaction will be forthcoming. If a transaction were to proceed, LSEG would intend to part fund it through an equity raise.”
Russell Investments attracted interest from suitors including Blackstone Group LP and Bain Capital LLC, people with knowledge of the matter said in March. Northwestern Mutual said in January that it had begun to explore options, including a possible sale, for its majority stake in Russell. The business may fetch about $3 billion, according to two of the people, who asked not to be identified because the talks aren’t public.
While Russell consists of two businesses, the Milwaukee-based insurer wants to keep it whole rather than split it up, two of the people said in March. LSE didn’t specify today whether it’s interested in all or part of the business.
Russell, founded in 1936 and based in Seattle, owns an index division that operates equity benchmarks such as the Russell 2000 Index and a money manager that has $257 billion in assets. The other large index providers, such as S&P Dow Jones Indices LLC, MSCI Inc. and FTSE, aren’t tied to an asset manager. That may present an obstacle to buyers that want a specialist benchmarking business.
In December 2011, LSE bought the 50 percent of FTSE International that it didn’t already own from Pearson Plc for 450 million pounds ($758 million) in cash. LSE has trailed rivals such as Deutsche Boerse AG in providing derivatives to investors. Owning an index operator makes it easier to provide futures and options contracts based on different gauges.
LSE’s shares declined 1.9 percent to 1,819 pence at 9:36 a.m. in London, paring their gain this month to 0.4 percent.