Microsoft’s investment in LSEG comes at a time when big tech names like Google, Amazon and IBM are increasingly engaged in an arms race to deepen relationships with financial firms.
Microsoft is buying a 4% stake worth $2 billion in the London Stock Exchange Group (LSEG).
In addition to getting a seat on LSEG’s board, the tech behemoth is expected to generate $5 billion in revenue over the course of 10 years and upgrade LSEG’s infrastructure, including the Refinitiv platform.
LSEG paid a hefty $27 billion for Refinitiv in a 2019 deal with Blackstone and Thomson Reuters. The acquisition turned Refinitiv, which currently boasts a customer base of 40,000 financial in-stitutions across 190 countries, into the second-largest data provider after Bloomberg.
Microsoft’s investment in LSEG comes at a time when big tech names like Google, Amazon and IBM are increasingly engaged in an arms race to deepen relationships with financial firms. The trend has prompted some regulators to question their overdependence on a handful of cloud providers.
“This strategic partnership is a significant milestone on LSEG’s journey toward becoming the leading global financial markets infrastructure and data business and will transform the experience for our customers,” said LSEG chief executive David Schwimmer.
Microsoft’s entry into the fray is likely to intensify Big Tech’s focus on the sector as the threat from emerging fintech companies wanes following the recent rout in equity markets. The deal has also led observers to speculate whether Microsoft could exert too much control over LSEG—a point dismissed by Schwimmer, who says LSEG will continue to work with other cloud computing providers.
Microsoft will acquire shares from Blackstone, Thomson Reuters, Canada Pension Plan Investment Board and Singapore’s GIC sovereign wealth fund, reportedly. The deal is expected to close in early 2023.
So far, LSEG has committed to spending a minimum of $2.8 billion with Microsoft on cloud-related services for the duration of the partnership. Analysts also expect the planned transformation of the Refinitiv platform to challenge Bloomberg’s market dominance.
Built on top of Azure Synapse, Azure Machine Learning and Microsoft Purview, the new cloud-based analytics will allow LSEG to offer a new centralized financial data platform.