London Stock Exchange Group (LSE) has agreed to sell Frank Russell Company’s asset management business Russell Investments to American private equity firm TA Associates for $1.15bn (£752m) in cash.
Under the terms of the deal, TA Associates will pay $1bn in cash on completion, while the remaining $150m will be paid annually in four equal cash instalments, starting from 31 December 2017.
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LSE has announced its intention to sell Russell Investments in February 2015.
Also, Reverence Capital has joined TA Associates, and will make a significant minority investment in Russell Investments.
Upon completion of the sale, subsidiaries of LSEG will sign certain licence agreements with Russell Investments. The deal is scheduled to close with proceeds payable to LSEG in the first half of 2016.
LSE will receive net proceeds of about $920m from the transaction after tax and expenses. The transaction is subject to customary closing adjustments, as well as regulatory and other required approvals.
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By GlobalDataAdditionally, LSE expects the index business to be completely separated from Russell Investments before the sale takes place in the second half of 2016.
Following the move, Russell Index business will be fully integrated with FTSE and FTSE Russell will be the overall operating business for both index offerings.
Furthermore, Russell Investments president and CEO Len Brennan will continue to lead Russell Investments, and will remain a member of the board of Russell Investments. He will step down from the executive committee of LSEG on closing.
LSEG CEO Xavier Rolet said: "We look forward to working with them and Russell Investments’ management to deliver a smooth transition of ownership. Until completion, LSEG remains firmly committed to Russell Investments, its global customer base, its exemplary client service and its innovative product offering."
TA Associates managing director Todd Crockett said: "We believe that the breadth of Russell Investments’ investment and implementation operations, as well as its orientation to multi-asset and solutions investing will continue to be a differentiator and driver of growth in the marketplace going forward."
Brennan said: "This transaction brings together a global asset manager with two of the most experienced private equity firms with significant asset management expertise.
"Russell Investments will maintain its operational independence, and TA Associates and Reverence Capital will provide us with strong financial backing, new strategic insights, and a commitment to help us continue to deliver innovative investment solutions to our global client base."
