LSEG to acquire The Yield Book and Citi Fixed Income Indices

LSEG to acquire The Yield Book and Citi Fixed Income Indices

  • LSEG to acquire The Yield Book and Citi Fixed Income Indices from Citi, including the World Government Bond Index (WGBI), for total cash consideration of $685 million (£535 million) subject to customary adjustments

  • The Yield Book and Citi Fixed Income Indices are both leading providers of fixed income indices and analytics globally

  • Enhances and complements LSEG’s Information Services data and analytics offering, building on FTSE Russell’s US market presence and fixed income client base globally

  • Allows FTSE Russell to capitalise further on key industry trends including strong growth in multi-asset solutions and passive investment strategies

  • LSEG and Citi committed to ensuring a smooth transition, prioritising business continuity and uninterrupted delivery of products and services

  • Attractive revenue and cost synergies of $30 million and $18 million respectively to be achieved through new product opportunities and operational efficiencies

London Stock Exchange Group (LSEG) has reached an agreement with Citigroup Inc. (Citi) to acquire The Yield Book and Citi Fixed Income Indices, a fixed income analytics platform and index business comprising a family of fixed income indices (including the WGBI) (together the “Business”) for a total cash consideration of $685 million (£535 million), subject to customary adjustments (the “Acquisition”). Subject to regulatory clearance and other customary closing conditions, the transaction is anticipated to close in the second half of 2017.

The Acquisition represents a significant opportunity for LSEG to enhance the data and analytics capabilities of its Information Services division (“ISD”) and its FTSE Russell franchise bringing, in particular, an increase in benchmark AUM to around $15 trillion, enhanced analytics capabilities and a broader multi-asset customer servicing capability. The Acquisition enables FTSE Russell to offer a comprehensive fixed income index family, broad and deep fixed income analytics to customers and a recognised global brand for both equity and fixed income in North America, Asia and Europe. The Acquisition reflects LSEG’s ongoing commitment to expanding the capabilities of its ISD, and follows the acquisition of the Russell indices business in 2014 and Mergent Inc. in 2016. The Yield Book also helps to strengthen LSEG’s presence in the United States, as well as ISD’s global distribution capabilities and also provides strong connectivity with the asset owner community in North America and Asia.

Mark Makepeace, Group Director of Information Services and CEO of FTSE Russell said:

The acquisition of The Yield Book and Citi Fixed Income Indices supports the continued strong growth and development of London Stock Exchange Group’s Information Services division. The acquisition represents a significant step for FTSE Russell to acquire a world-class fixed income analytics and index business, enhancing our ability to provide customers with broader multi-asset capabilities and a deeper data and analytics offering. I very much look forward to working together with the team at Yield Book and Citi Fixed Income Indices as we develop our businesses over the coming months. We are also delighted that Citi will remain a significant customer of the Yield Book and a long term partner.”

The Business includes a fixed income client base from around the globe, offers widely trusted proprietary fixed income analytics and indices that enable market participants to perform complex portfolio analysis and risk management, including portfolio construction, risk forecasting and performance analysis tools.

The Yield Book’s highly respected analytics platform is operating in its third decade and serves approximately 350 institutions globally including investment management firms, banks, central banks, insurance companies, pension funds, broker-dealers, hedge funds and investment management firms. The Yield Book’s products offer analytical insights into a broad array of fixed income instruments with specific focus on mortgage, government, corporate and derivative securities. The Yield Book’s mortgage models, developed in collaboration with Citi’s mortgage quantitative analysis and research teams, are widely considered to be the industry standard. The Yield Book’s products and services will continue to be supported by a highly experienced team and the analytics platform will continue to grow. Further, LSEG and Citi will enter into a long-term partnership, by which each is committed to collaborating on future development and support of these models and associated products. Citi will remain a significant customer of The Yield Book and a long term partner.

Citi Fixed Income Indices have been producing fixed income indices for more than 30 years.  These indices, designed to appeal to a wide range of market participants, are widely followed and broadly published. The World Government Bond Index is among the most closely followed globally. Citi’s Fixed Income Indices have approximately 300 clients globally, including 200 buy-side fixed income asset managers and asset owners. From traditional market value-weighted benchmarks to innovative alternatively-weighted strategy indices, the comprehensive family of indices will join FTSE Russell’s existing portfolio of complementary indices, broadening its multi-asset offering. The indices will continue to be maintained based on existing design criteria and calculation methodologies, and will continue to align with regulatory requirements such as the IOSCO principles.

In the year to 31 December 2016, the combined Business generated revenue of $107 million and EBITDA of $46 million (implying an EV / 2016 EBITDA of 14.9x), based on a pro forma estimate of the central costs to be allocated to the Business under LSEG ownership.

LSEG expects to achieve revenue synergies of $30 million over the first three years post completion through investment in new product opportunities and increased index adoption. Additionally, LSEG expects to achieve cost synergies of $18 million over the same period through operational efficiencies to align FTSE Russell product strategy with The Yield Book, with further potential upside in the subsequent two years. By the end of the first three years post completion, LSEG expects to deliver an increase in the EBITDA margin to at least 50%, improving as further synergies are achieved.

The Acquisition is being funded from existing cash resources and credit facilities and is expected to close in the second half of 2017 following satisfaction of closing conditions, including expiry of the waiting period under the Hart-Scott-Rodino Act. The Acquisition is expected to be accretive to earnings in the first full year following completion. The existing leadership team and employees of The Yield Book will transfer with the business to LSEG.

Barclays Bank PLC, acting through its Investment Bank (“Barclays”) acted as financial advisor to London Stock Exchange Group.  Freshfields Bruckhaus Deringer LLP was counsel to London Stock Exchange Group.


Paul Froud - Investor Relations                                      +44 (0) 20 7797 3322

Lucie Holloway / Ed Clark - Media                                  +44 (0) 20 7797 1222

  1. Calculation of sterling consideration assumes a USD/GBP FX rate of 0.781.


About London Stock Exchange Group:

London Stock Exchange Group (LSE.L) is an international markets infrastructure business. Its diversified global business focuses on capital formation, intellectual property and risk and balance sheet management. LSEG operates an open access model, offering choice and partnership to customers across all of its businesses. The Group can trace its history back to 1698.

The Group operates a broad range of international equity, ETF, bond and derivatives markets, including London Stock Exchange; Borsa Italiana; MTS (Europe's leading fixed income market); and Turquoise (a pan-European equities MTF). Through its platforms, LSEG offers market participants, including retail investors, institutions and SMEs unrivalled access to Europe’s capital markets. The Group also plays a vital economic and social role, enabling companies to access funds for growth and development.

Through FTSE Russell, the Group is a global leader in financial indexing, benchmarking and analytic services with approximately $12.5 trillion benchmarked to its indexes. The Group also provides customers with an extensive range of data services, research and analytics through Mergent, SEDOL, UnaVista, XTF and RNS.

Post trade and risk management services are a significant part of the Group’s business operations. In addition to majority ownership of LCH, a multi-asset global CCP operator, LSEG owns CC&G, the Italian clearing house; Monte Titoli, a leading European custody and settlement business; and globeSettle, the Group’s CSD based in Luxembourg.

LSEG is a leading developer and operator of high performance technology solutions, including trading, market surveillance and post trade systems for over 40 organisations and exchanges, including the Group’s own markets. Additional services include network connectivity, hosting and quality assurance testing. MillenniumIT, GATElab and Exactpro are among the Group’s technology companies.

Headquartered in the United Kingdom, with significant operations in North America, Italy, France and Sri Lanka, the Group employs approximately 4,000 people.

Further information on London Stock Exchange Group can be found at

Important information:

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond LSEG’s control and all of which are based on its respective directors' current beliefs and expectations about future events. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect LSEG’s current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to LSEG’s business, results of operations, financial position, liquidity, prospects, growth and strategies. Forward-looking statements speak only as of the date of this announcement and cannot be relied upon as a guide to future performance. LSEG  expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statement contained in this announcement whether as a result of new information, future developments or otherwise, unless required to do so by applicable law or regulation. No statement in this announcement is intended to be a profit forecast and no statement in this announcement should be interpreted to mean that earnings per LSEG ordinary share for the current or future financial years would necessarily match or exceed the historical published earnings per LSEG ordinary share.

Barclays, which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority, is acting exclusively for LSEG and no one else in connection with the Acquisition and will not be responsible to anyone other than LSEG for providing the protections afforded to clients of Barclays nor for providing advice in relation to the Acquisition or any other matter referred to in this announcement.