Post by : Badri Ariffin

London Stock Exchange Group (LSE: LSEG) is taking a significant step to deepen collaboration with its biggest clearing clients by selling a 20% stake in its Post Trade Solutions unit to 11 major global banks. The deal, valued at £170 million, places the business at an overall valuation of £850 million.

The investors include Bank of America, Barclays, BNP Paribas, Citi, Deutsche Bank, HSBC, J.P. Morgan, Morgan Stanley, Nomura, Societe Generale, and UBS. Each will become a shareholder in Post Trade Solutions, a unit providing risk management and optimization services for the uncleared derivatives market.

In 2024, Post Trade Solutions generated £96 million in revenue and £16 million in earnings before interest, tax, depreciation, and amortization (EBITDA). Under the terms of the deal, LSEG will also increase its revenue share from SwapClear, the group’s flagship interest rate swaps clearing service. The banks’ share of SwapClear’s surplus revenue will drop from around 30% to 15% for 2025 and then to 10% from 2026 onwards.

LSEG will make an upfront cash payment of £1.15 billion, with an additional £200 million potentially payable depending on future growth. The move is expected to boost profitability across LSEG’s markets division, lifting earnings per share by an estimated 2–3% in 2025, with further gains anticipated in the following year.

The banks will also receive three board seats at Post Trade Solutions, allowing them direct input into the business’s strategic direction. The transaction is expected to complete next year.

This deal reflects a broader trend in the financial industry, where exchanges and banks are forging closer partnerships to enhance operational efficiency and drive innovation in post-trade processes. By aligning the interests of clearing clients and service providers, LSEG aims to reinforce its position as a leader in derivatives clearing and risk management services.

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