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Profits 'jump by a third for LSE ahead of Deutsche Börse merger'

Economy:
Profits 'jump by a third for LSE ahead of Deutsche Börse merger'

LONDON Stock Exchange talked up the "compelling" opportunity to create a trading powerhouse through a merger with Deutsche Börse while bolstering its appeal to other potential suitors after its annual profit jumped by nearly a third.

The group, which has attracted bid interest from New York Stock Exchange owner InterContinental Exchange (ICE) since announcing talks last month over a & pound; 20billion-plus "merger of equals" with its German rival, posted a 31 per cent rise in adjusted profit to & pound; 643.4million.

Revenue soared 78 per cent to & pound; 228billion, boosted by the acquisition of US index provider Russell Investments.

LSE, which owns Borsa Italia and LCH.Clearnet, a clearing house for trades in derivatives, said it is on track to sell Russell's asset management business for & pound; 813million over the next few months, using the proceeds to repay debt.

Profits 'jump by a third for LSE ahead of Deutsche Börse merger'

Chief executive Xavier Rolet, said the business had been strengthened by acquisitions and innovative new products and was well placed to continue to grow.

But he added: "We operate in a dynamic industry and we are not complacent. However, the role of a global open access markets infrastructure business has never been more relevant.

"The potential merger of equals with Deutsche B & ouml; rse would represent a compelling opportunity to strengthen each other in an industry-defining combination, creating a European-based global market infrastructure group with significant benefits for our customers and shareholders."

Profits 'jump by a third for LSE ahead of Deutsche Börse merger'

Rolet, who will step aside should the deal with Deutsche B & ouml; rse go ahead, declined to comment on prospective interest from ICE.

LSE said 88 companies floated on its main market in 2015 compared with 75 the previous year, while admissions to its junior Aim market fell to 61 from 118.

Despite turbulence in financial markets during the first quarter, Rolet said there remains a "good pipeline" of new entrants.

Profits 'jump by a third for LSE ahead of Deutsche Börse merger'

Michael Hewson, chief market analyst at spreadbetter CMC Markets, said: "Given these results it's not hard to see why Deutsche B & ouml; rse and ICE are both interested and the fact that London is the centre of the European IPO (initial public offering) market, where we've seen 72 per cent of the overall IPO activity in the past 12 months.

"London's appeal as a centre for private equity and hedge funds makes the task of raising capital that much simpler."

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05 March 2016, 8:11