The City enjoyed a £25m bonanza yesterday as the London Stock Exchange raised £938m through a rights issue to part-fund its $2.7bn (£1.6bn) takeover of the US indices firm Frank Russell.
The issue is being offered on the basis of three new shares for every 11 owned at a deeply discounted price of 1,295p a share. LSE shares added 24p to 2,029p.
The vast bulk of the £25m that the LSE is paying in fees will go to the underwriters of the issue, of whom there are no fewer than eight – Barclays, RBC Capital Markets, Deutsche Bank, JP Morgan Cazenove, Banca IMI, Banco Santander, HSBC and Mitsubishi UFJ Securities.
They guarantee that the LSE will get the cash it needs by promising to take up any rights not claimed by existing shareholders. But at a 35 per cent discount to the current share price, the risk to the underwriters is very low.
LSE’s chief executive, Xavier Rolet, said: “This is a strong strategic acquisition for the group, which will accelerate development in one of our core strengths, intellectual property, and offers significant growth potential.”
LSE also reported a 26 per cent rise in pre-tax profits to £130m in the three months to June on a 20 per cent increase in revenues.