LSEG Divests 20% Stake in Post Trade Solutions to Leading Banks

The London Stock Exchange Group (LSE: LSEG) is enhancing collaboration with major clearing clients by divesting a 20% interest in its Post Trade Solutions division to 11 leading global banks. This transaction, valued at £170 million, brings the total valuation of the business to £850 million.

Investors include Bank of America, Barclays, BNP Paribas, Citi, Deutsche Bank, HSBC, J.P. Morgan, Morgan Stanley, Nomura, Societe Generale, and UBS, all of whom will hold shares in Post Trade Solutions, which specializes in risk management and optimization for the uncleared derivatives market.

In 2024, Post Trade Solutions is projected to report £96 million in revenue, alongside £16 million in earnings before interest, tax, depreciation, and amortization (EBITDA). Following this deal, LSEG plans to enhance its revenue share from its flagship interest rate swaps clearing service, SwapClear. The banks' share of SwapClear's surplus revenue will decline from roughly 30% to 15% in 2025, and further to 10% from 2026 onward.

LSEG will initially pay £1.15 billion in cash, with an additional £200 million contingent on future growth. This strategy is anticipated to bolster profitability within LSEG's markets division, raising earnings per share by approximately 2–3% in 2025, with additional improvements expected in subsequent years.

The banks involved will obtain three board seats at Post Trade Solutions, granting them direct influence over strategic business decisions. This transaction is anticipated to finalize in the upcoming year.

This initiative underscores a growing trend within the financial sector, where exchanges and banks seek to reinforce their collaborations to boost operational efficiency and innovate post-trade processes. By harmonizing the interests of clearing clients with service providers, LSEG aims to solidify its leadership in derivatives clearing and risk management services.