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Activist hedge fund Elliott Management has built a significant stake in the London Stock Exchange Group, as the UK company contends with fears over disruption from AI and a lacklustre listings market.
Elliott has been engaging with the LSEG, which is led by chief executive David Schwimmer, to help engineer an improvement in the group’s performance, according to people familiar with the matter.
Shares in LSEG, which have fallen by about a third over the past year, were caught up last week in a broad sell-off of data and software companies amid fears new AI tools will undermine their business models.
The investment represents Elliott’s latest significant bet on a blue-chip UK company, as the hedge fund pushes for sweeping changes at oil major BP and remains a large investor in mining group Anglo American.
The exact size of the stake could not be ascertained. Elliott declined to comment.
In a statement on Wednesday afternoon, LSEG said: “LSEG maintains an active and open dialogue with our investors, while remaining focused on executing our strategy.”
Following the FT’s report on Elliott’s stake, LSE shares rose as much as 8 per cent at the open on Wednesday before giving up the gains to trade 0.7 per cent lower by early afternoon. LSEG has a market capitalisation of £38bn.
Shares in other companies exposed to disruption from AI fell during the day, including Relx, which was down 5 per cent by afternoon. Wealth managers St James’s Place and AJ Bell were also hit after a US-based platform launched a tool to help advisers personalise clients’ investment strategies.
Elliott, run by billionaire Paul Singer, has $76bn of assets under management.
Although LSEG is best known as the operator of the stock exchange, the group’s £22bn acquisition of Refinitiv in 2019 transformed it into a financial data and analytics powerhouse. It also owns a roughly £10bn stake in electronic trading platform Tradeweb.
Ahead of the release of LSEG’s annual results later this month, Elliott has encouraged the company to consider launching a multibillion-pound share buyback once a £1bn tranche is completed and to focus on closing the gap on margins compared with rivals, the people said.
LSEG’s valuation multiple lags behind rivals such as Moody’s and CME Group.
Elliott has previously pushed for companies to simplify their corporate structure to boost performance. However, Elliott does not want LSEG to consider a full sale or a spin-off of its stock-exchange business, the people said.
The exchange has been hit by the exits of a series of companies from its blue-chip FTSE 100 index in recent years, as businesses seek to tap deeper pools of capital in the US. LSEG’s data and analytics business, meanwhile, faces increasing concern over the threat from AI.
LSEG shares were hit last week after the launch of a new suite of AI tools from Anthropic prompted a sell-off in software and data stocks.
Analysts at JPMorgan said in a note last week that the fears over AI’s impact on LSEG’s business model were “unwarranted”, pointing to a partnership struck last October between LSEG and Anthropic that would feed LSEG’s data into the start-up’s Claude app.