The owner of the London Stock Exchange expects continued growth and 'improving profitability' this year despite the ongoing weakness of its domestic bourse. The LSE has seen an exodus of big names in recent years, including Flutter and CRH, while fewer new companies have come to market.
But its owner, London Stock Exchange Group, has grown to become one of its own market's 10 largest companies by market capitalisation, thanks to its expansion efforts. Share listing and trading now account for just 3 per cent of LSEG's annual revenues as it has embraced diversification in recent years.
LSEG expects total income, excluding recoveries, to expand by 6.5 to 7.5 per cent at constant currency rates in 2024, having increased by 8.4 per cent to £8.5billion last year, supported by new product innovation and availability. It noted that over 500 enhancements had been made to its Workspace terminal, while the first products launched under its partnership with Microsoft were now 'generally available'.
LSEG struck a 10-year strategic partnership with Microsoft in December 2022 as part of an agreement to move the bourse's data platform onto the cloud, with Microsoft taking a 4 per cent stake in the group. More recently, LSEG's Tradeweb subsidiary acquired investment platform Institutional Cash Distributors [ICD] in a $785million deal last August, allowing it to capitalise on the rapidly-growing corporate treasury market.
Outlook: London Stock Exchange Group expects continued growth and 'improving profitability' this year, supported by new product innovation and availability. But LSEG scored healthy growth across all divisions in 2024, especially its FTSE Russell, which manages the company's stock market indices, risk intelligence and capital markets businesses.
As a result, the firm's earnings before nasties rose by 12.3 per cent to £3.95billion, while its pre-tax profits went up 5.3 per cent to £1.3billion. David Schwimmer, the firm's chief executive, said: 'LSEG has achieved a strong performance across the group, enhanced by an exceptional year for Tradeweb.
'Our guidance for continued growth and improving profitability in 2025 demonstrates our confidence in our model, which has consistently delivered strong performance across a range of market conditions.'. The New York-born boss has received criticism for earning significant pay packages despite a substantial exodus of companies from the London markets during his tenure.
Shareholders voted overwhelmingly last April to more than double Schwimmer's maximum compensation deal from £6.25million to £13million. Meanwhile, 88 businesses either delisted or switched their primary listing from the main London market in 2024, the highest number since the global financial crisis, according to auditor EY.
Many fell victim to foreign takeovers, including Robinsons Squash producer Britvic, cybersecurity giant Darktrace, and music rights investor Hipgnosis Songs Fund. There were also just 18 initial public offerings on the LSE, the lowest since 2010, amid a broader global downturn in new listings.
To try and attract more companies, the Financial Conduct Authority has introduced a more simplified listings regime, removing the requirement for shareholder votes on significant or related party transactions among other reforms. The UK Government also plans to merge dozens of different local council pension funds into a few 'pension megafunds' to boost investment.
Schwimmer also highlighted LSEG's innovation and global partnership efforts. Matt Britzman, senior equity analyst at Hargreaves Lansdown, said this could be a 'subtle nod' to 'keeping [London] in the game against tough rivals like New York. He added: 'LSEG didn’t explicitly spotlight a grand plan to boost London’s standing as a listing location, but the tone suggests quiet confidence in their role.
'Looking ahead, the company’s keeping its cool with a steady 2025 outlook, promising to keep the growth engine humming and margins plump - positioning LSEG as a quiet powerhouse ready to capitalise on the growing demand for data tools in the financial world.'.
London Stock Exchange Group shares were 2.7 per cent up at £113.95 on Thursday morning, making them the second-biggest riser on the FTSE 100 Index behind Rolls-Royce Holdings. Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
