Key Takeaways
- • TA Associates and Reverence Capital Partners have acquired Russell Investments' asset management business from the London Stock Exchange Group for $1.15 billion in cash, with Reverence taking a significant minority stake alongside TA Associates as lead acquirer.
- • Russell Investments manages approximately $266 billion in assets under management and will maintain operational independence under the new ownership structure, with no planned layoffs resulting from the transaction.
- • LSE will receive $1 billion at deal completion with the remaining $150 million paid in four annual installments beginning December 31, 2017, with expected net after-tax proceeds of approximately $920 million.
- • The sale follows LSE's decision to divest Russell Investments' asset management arm to focus on growing its index business, separating the index operations from Russell Investments before the sale closes in Q1.
- • Russell Investments CEO Len Brennan emphasized the firm will benefit from "strong financial backing, new strategic insights, and a commitment to help us continue to deliver innovative investment solutions to our global client base" under private equity stewardship.
Summary
Private equity firm TA Associates has agreed to acquire the Russell Investments asset management business from the London Stock Exchange Group for $1.15 billion in cash. Reverence Capital Partners will join TA Associates as a co-investor, taking a significant minority stake in the Seattle-based asset manager. The transaction reflects a strategic pivot by LSE to concentrate on expanding its index business following its acquisition of Russell Investments for $2.7 billion the previous year.
Russell Investments, which manages $266 billion in assets, will operate as an independent platform under the new ownership structure. According to the transaction terms, LSE will receive $1 billion upon deal completion, with the remaining $150 million to be paid in four equal annual installments beginning December 31, 2017. After accounting for taxes and other liabilities, LSE anticipates net proceeds of approximately $920 million from the transaction. The price represents a modest discount to initial market expectations, which had anticipated a $1.5 billion valuation.
In February, LSE announced its intention to divest Russell Investments' investment management operations to focus capital allocation on its index business. The transaction requires complete separation of Russell's index operations from its asset management arm during Q1 prior to the sale closing. Russell Investments President and CEO Len Brennan stated that the firm will "maintain its operational independence" while benefiting from the financial backing and strategic support of both TA Associates and Reverence Capital. The Seattle Times reported, citing sources familiar with the deal, that the transaction will not result in layoffs among Russell Investments' workforce, providing assurance to employees regarding employment continuity through the transition.
Russell Investments, which manages $266 billion in assets, will operate as an independent platform under the new ownership structure. According to the transaction terms, LSE will receive $1 billion upon deal completion, with the remaining $150 million to be paid in four equal annual installments beginning December 31, 2017. After accounting for taxes and other liabilities, LSE anticipates net proceeds of approximately $920 million from the transaction. The price represents a modest discount to initial market expectations, which had anticipated a $1.5 billion valuation.
In February, LSE announced its intention to divest Russell Investments' investment management operations to focus capital allocation on its index business. The transaction requires complete separation of Russell's index operations from its asset management arm during Q1 prior to the sale closing. Russell Investments President and CEO Len Brennan stated that the firm will "maintain its operational independence" while benefiting from the financial backing and strategic support of both TA Associates and Reverence Capital. The Seattle Times reported, citing sources familiar with the deal, that the transaction will not result in layoffs among Russell Investments' workforce, providing assurance to employees regarding employment continuity through the transition.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.