London Stock Exchange share price falls 3.5% as Qatar slashes its stake

The oil emirate's sovereign wealth fund doesn't want to stump up more cash when the stock exchange issues shares later this year.

by Rachel Savage
Last Updated: 28 Jan 2015

Qatar Investment Authority, the oil-flush emirate’s sovereign wealth fund, is slashing its stake in the London Stock Exchange by almost a third before the bourse issues $1.6bn (£930m) of new shares to fund its biggest ever acquisition.

It had a 15% stake before it sold off a holding of almost 5% last night, worth around £255m at yesterday’s closing price of £19.56. The QIA said the sale was ‘routine portfolio management’, but looks suspiciously like it doesn’t want to stump up more money to fund the LSE’s $2.7bn acquisition of index provider and asset manager Russell Investments.

Instead, the QIA is expected to use the cash from the stake sale to maintain its now-10% stake when the LSE dishes out the new shares in September, banking sources told the FT.

Qatar is nothing if not an anglophile: it owns or has major stakes in trophy assets across London including the Shard, Harrods and Camden Market. While it is not backing out of LSE completely, those grown fat off Gulf money may be worried this is the start of the emirate scaling back investments in the capital.
Around $5.2tn worth of assets are tied to and traded through Russell Investments’ indicies, particularly in the US, while $4tn is benchmarked to LSE’s FTSE International business, according to the FT. The acquisition will bring LSE right up behind rival index providers MCSI and S&P Dow Jones.

It’s not the first large purchase for LSE in recent years: it snapped up a majority stake in clearing house LCH Clearnet at the end of 2012 (and took full control of it earlier this year) after it bought FTSE International off publishers Pearson at the end of 2011.

Investors were a tad spooked by Qatar selling off its stake: shares fell around 3.5% in mid-morning trading, after doubling in price since December 2012 to a record high of £20.29 just last week.


Find this article useful?

Get more great articles like this in your inbox every lunchtime