The London Stock Exchange is reportedly mulling a bid to acquire Russell Investments in an effort to bolster’s LSE indexing business.
LSE, the parent company of FTSE International financial indices, “said on Tuesday any deal would be part funded by selling new stock to its existing shareholders,” report Freya Berry and Clare Hutchison for Reuters.
Seattle-based Russell, a unit of Northwest Mutual, could be worth up to $3 billion in a sale. In January, it was reported that Northwestern Mutual was mulling a sale of Russell. Although not mentioned in connection with Russell, it has also been reported that Nasdaq OMX Group (NasdaqGM: NDAQ) and S&P Dow Jones Indices are shopping for acquisitions to bolster their index offerings. [Nasdaq, S&P Hunt for Index Acquisitions]
Some potential suitors did not make it past the first round of bidding for Russell because they only want the indexing business and Northwestern Mutual would prefer not to break up Russell’s asset management and indexing unit.
Analysts believe LSE is only interested in the indexing business and that would reduce the potential sale price to $1 billion, according to Reuters.
In March, it was reported that Russell was drawing interest as a takeover target from private equity firms Blackstone (NYSE: BX) and Bain Capital. [Russell Draws Interest From Private Equity Suitors]
It had previously been reported that private equity firms KKR & Co., Apollo Global Management LLC, Hellman & Friedman LLC, Carlyle Group and Genstar Capital could also be interested in Russell.
LSE’s move on Russell makes sense due to FTSE’s expanding footprint in the North American indexing business. Roughly 15 U.S.-listed ETFs have transitioned to FTSE indices in less than two years and there are over 100 North American ETFs benchmarked to FTSE indices. [FTSE’s Growing U.S. Presence]
FTSE is also the index provider for an array of well-known ETFs including the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO), the largest emerging markets ETF by assets. The iShares China Large-Cap ETF (NYSEArca: FXI), the largest and most heavily traded China ETF, also tracks a FTSE index.
Recent media reports said Canadian Imperial Bank of Commerce and index MSCI were among the interested suitors for Russell.
ETF Trends editorial contributed to this post.