London Stock Exchange Group Plc agreed to sell Russell Investments, its asset management business, to private equity firms TA Associates and Reverence Capital Partners for $1.15 billion.
TA Associates will make the cash purchase, while Reverence Capital will make a “significant minority investment” in Russell Investments, according to a statement on Thursday. The London exchange operator acquired the asset management business last year as part of its larger $2.7 billion acquisition of Frank Russell Co., formerly of Tacoma.
“We are very pleased to have agreed the proposed sale of Russell Investments to TA Associates and Reverence Capital, both of whom have strong track records investing in the asset management industry,” Xavier Rolet, chief executive officer of London Stock Exchange, said in the statement.
The company wanted Frank Russell’s index business to bolster its own FTSE International division, which makes money from licensing benchmarks to creators of exchange-traded funds and other financial products. Russell Investments oversees about $266 billion.
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The market operator was said to be close to selling the Russell Investments to China’s Citic Securities Co. for as much as $1.8 billion. The deal faltered amid a plunge in Chinese markets and a government investigation into Citic Securities executives, according to people with knowledge of the matter at the time.
The exchange will be paid $1 billion in cash when the deal is completed during the first half of 2016, with the remainder paid annually in four installments. The company expects to extract about $920 million after expenses from the sale. That would equate to a purchase price for the Russell index business of about $1.86 billion, the company said.
Cash from the sale will be applied to the exchange company’s debt.
Russell Investments completed its relocation from Tacoma to Seattle in 2010.