The deal is part of a collaboration that could net Microsoft about $2.8 billion over the years.
(Photo: Reuters)
Dusseldorf The British stock exchange operator LSE, owner of the London Stock Exchange, wants to invest heavily in the modernization of its technology infrastructure – and is bringing a prominent shareholder on board for this purpose: As part of a strategic partnership, Microsoft is taking over around four percent of the shares.
The aim of the cooperation is to set up a next-generation data infrastructure and to jointly develop new products and services. For LSE it is an “important milestone” on the way “to becoming the leading global financial market infrastructure and data company,” said CEO David Schwimmer on Monday.
The shareholders responded positively to the deal, and the British stock exchange operator’s shares were up more than four percent on Monday morning.
Microsoft takes over the block of shares from a consortium of the financial investor Blackstone and the media group Thomson Reuters. These became LSE shareholders when the data provider Refinitiv was sold in 2021. Based on Friday’s closing price, the stake is worth around £1.6 billion.
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Large stock exchange operators such as Deutsche Börse, Nasdaq and London Stock Exchange have been investing heavily in digitization for years. In addition to securities trading, the companies want to open up new business areas, for example with the analysis of financial data or solutions for the prevention of money laundering and fraud.
Based on the Microsoft cloud Azure, LSE wants to build a data architecture “that is simple, responsive and efficient and takes into account security, data protection and compliance”. The partnership also provides for the development of new applications with artificial intelligence.
LSE workspace is to be networked with Microsoft teams
In addition, LSE will link the Workspace platform with Microsoft’s Teams collaboration software to facilitate collaboration in the financial industry. So far, the community has been spending a large part of its time on different platforms and with disparate data sets, the IT group explained.
The deal includes significant financial commitments. LSE pledges Microsoft to spend at least £2.3 billion (€2.7 billion) over the course of the ten-year deal. The sum has already been taken into account in the long-term cost forecast, according to the statement.
Microsoft is setting the potential even higher. The partnership builds on previous investments in the financial sector, and the deal and “broader market opportunity” could add $5 billion in revenue over the next 10 years, the company said in a statement.
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