A certain amount of mental gymnastics is required when looking at the London Stock Exchange (LSEG). In some ways it is curious that the 300-year-old institution – home to almost 2,000 businesses – is a listed company in its own right, whose shares are bought and sold via the infrastructure it provides. The fact that it is also the 12th biggest player on its own exchange feels more meta than Meta (US:META) itself. Weirder still is the fact that just 3 per cent of its revenue comes from the exchanging of stocks. Once you accept that LSEG is a strange beast, however, you start to see its potential.
- Sticky revenues
- Promising Microsoft deal
- Steady top-line growth
- UK market monopoly
- Key person risk
- Big adjustments to earnings
LSEG is now essentially a data company, providing real-time financial intelligence for 45,000 banks, asset managers and newswires worldwide. It has done this for several years, but things stepped up a gear in 2021 when it completed the acquisition of analytics firm Refinitiv for $27bn (£21.2bn). Before the mega-deal, information services accounted for about 40 per cent of group sales. Today, they contribute over 70 per cent of the top line.