Activist hedge fund Elliott Management has taken a significant stake in the London Stock Exchange Group (LSEG), , as the UK-based financial infrastructure company navigates concerns surrounding disruption from artificial intelligence and a sluggish market for new listings.
Elliott has begun engaging with LSEG’s leadership, including Chief Executive David Schwimmer, with the aim of improving the group’s performance, according to individuals with knowledge of the matter. The size of Elliott’s investment remains undisclosed, and both Elliott and LSEG declined to comment.
The investment arrives at a sensitive time for LSEG. Shares in the company have declined by approximately one-third over the past year, and were caught up in a broader sell-off of data and software companies last week, fueled by anxieties that emerging AI tools could erode their business models. Following reports of Elliott’s stake, LSEG shares initially rose as much as 8 percent at the market open, before settling up 2.4 percent, valuing the company at £38 billion.
Elliott Management, led by billionaire Paul Singer, manages $76 billion in assets. This investment represents the firm’s latest foray into prominent UK companies, building on existing positions in oil major BP and mining group Anglo American, where Elliott is advocating for substantial changes.
LSEG’s transformation from a traditional stock exchange operator into a financial data and analytics powerhouse began with its £22 billion acquisition of Refinitiv in 2019. The group also holds a roughly £10 billion stake in Tradeweb, an electronic trading platform.
Ahead of LSEG’s annual results later this month, Elliott is reportedly encouraging the company to initiate a multibillion-pound share buyback program, contingent upon the completion of a current £1 billion tranche. The hedge fund is also pushing LSEG to narrow the margin gap with its competitors, sources said. Currently, LSEG’s valuation multiple trails behind those of rivals such as Moody’s and CME Group.
The pressure from Elliott comes as LSEG faces headwinds on multiple fronts. A series of companies have delisted from the LSE’s flagship FTSE 100 index in recent years, opting to pursue listings in the United States where they believe they can access larger capital pools. Simultaneously, LSEG’s data and analytics business is grappling with increasing scrutiny regarding the potential impact of AI on its core offerings.
Last week’s market turbulence was triggered by the launch of a new suite of AI tools from Anthropic, prompting a sell-off in software and data stocks. However, analysts at JPMorgan have argued that concerns about AI’s impact on LSEG’s business model are “unwarranted.” They point to a partnership established in between LSEG and Anthropic, which will integrate LSEG’s data into Anthropic’s Claude AI application.
Elliott Management has a history of advocating for corporate simplification to enhance performance. However, sources indicate that Elliott does not intend to push for a complete sale or spin-off of LSEG’s stock exchange business.
The broader context of the software selloff, as highlighted in a report by Reuters, suggests that concerns about AI disruption extend beyond LSEG, potentially posing a risk to a $1.5 trillion U.S. Credit market. This underscores the widespread anxiety within the financial technology sector regarding the transformative potential of AI.
The situation at LSEG reflects a wider trend of activist investor engagement in the UK market, as evidenced by Elliott’s existing campaigns at BP and Anglo American. Georgeson, a proxy advisory firm, noted in a roundup that shareholder activism remains a significant force in corporate governance, particularly in Europe and North America.
