LSEG’s Octus talks put £2.6 billion price on credit data

London Stock Exchange Group confirmed in a Mail Online article published Oct. 13 that it is discussing a £2.6 billion acquisition of Octus, a New York financial-data provider owned by Permira.

A deal at that price would value Octus at more than double the £1 billion valuation attached to Permira’s 2022 controlling-stake purchase, underlining investor demand for specialist credit-market data.

LSEG said no final agreement had been reached and that a transaction was not guaranteed, according to the article. It confirmed the talks after Reuters reported the discussions.

Octus supplies banks and investors with information on credit markets, with a focus on financially distressed companies. Its model combines journalists, analysts, legal specialists and technology to review regulatory and court records.

LSEG described Octus as having a leading position in the “high growth” area of illiquid and private credit, according to the article. It also cited “a strong track record of double-digit revenue growth based on a high-retention subscription model” and said an acquisition would lift revenue growth immediately.

The possible purchase would add to LSEG’s effort to build a larger data and analytics business around financial-market infrastructure. The group owns the London Stock Exchange, but the article said data and analytics are its largest business.

LSEG expanded that strategy in 2021 through its £20 billion acquisition of Refinitiv, the financial-data and news provider. Octus would be a smaller deal, but one focused on private and less-liquid credit markets, where investors rely on paid research and data to assess risks that are harder to price in public markets.

The market reaction was negative. LSEG shares closed 4.7%, or 410 pence, lower at 8,350 pence after the Octus talks became public, according to the article.

RBC analyst Ben Bathurst said the share move looked “overdone,” according to the article. He said the possible transaction was unlikely to threaten LSEG’s plan for £3 billion of share buybacks, adding: “The fact that LSEG has confirmed a specific consideration figure leads us to believe that discussions are fairly advanced.”

The acquisition would still face execution and approval hurdles. The article said any transaction would require regulatory clearance, and LSEG said there was no certainty that a final deal would be signed.

The talks also carry symbolic weight in the UK market. They come as British-listed companies have been frequent takeover targets, while London has struggled to attract new listings.

Peel Hunt said in a report this week that there have been 166 takeovers worth £180 billion since the start of 2023, including £74 billion so far this year. Over the same period, the broker counted 11 initial public offerings worth £6 billion.

Companies targeted this year include EasyJet, Segro, Beazley, Schroders and Tate & Lyle, according to the article. Flutter and Tui have left London for exchanges in New York and Europe.

“To say that the UK has a problem retaining its companies and listing new ones would be a massive understatement,” Peel Hunt head of research Charles Hall said, according to the article.

LSEG’s next step is whether it can turn the Octus discussions into a signed agreement with Permira, then secure the regulatory approvals required for any transaction.