THE London Stock Exchange Group plans to raise £938m to part fund the acquisition of US indexes group Frank Russell.
LSE will offer 74,347,813 new shares at a price of 1,295 pence, a 30.1 per cent discount to its closing price on Thursday.
The new ordinary shares represent 27.3 per cent of the existing share capital and would be 21.4 per cent of the enlarged issued share capital, following the rights issue.
Europe’s oldest independent bourse unveiled plans to buy Frank Russell for $2.7bn in June to move deeper into the US financial services market. LSE said then it would help fund the purchase by issuing new stock.
The deal would give LSE third place in the booming market for exchange traded funds (ETFs), low-cost funds that provide an alternative to active fund management, behind market leaders S&P Dow Jones and MSCI.
The rights issue has been fully underwritten by Barclays, RBS Capital Markets, Deutsche Bank, JP Morgan Cazenove, Banca IMI, Banco Santander, HSBC and Mitsubishi UFJ Securities.
LSE will pay the remaining $1.1bn for Frank Russell with its existing multi-currency bank debt facilities. They include a recently signed £600m multi-currency revolving credit facility which has an initial two-year term.
The deal, which is expected to boost earnings in the first full year after the merger, will create an index compiler with some $9.2 trillion of assets benchmarked against the performance of its market measures, which include the FTSE 100.
The London Stock Exchange said it intends to continue paying dividends on a progressive basis following the Frank Russell acquisition, with future payments adjusted to take account of the increased number of shares.
Russell was founded in 1936 and is based in Seattle.