Microsoft acquires 4% stake in London Stock Exchange
Microsoft has announced a 10-year partnership with the London Stock Exchange Group (LSEG) involving next-generation data, analytics and cloud computing products.
As part of the arrangement, Microsoft will acquire 4% stake worth £1.5 billion in LSEG from Blackstone, Thomson Reuters, Singapore's sovereign wealth fund GIC and Canada Pension Plan Investment Board.
David Schwimmer, CEO of London Stock Exchange Group, described the new partnership as "a significant milestone on LSEG's journey towards becoming the leading global financial markets infrastructure and data business."
He added, "Bringing together our leading data sets, analytics and global customer base with Microsoft's comprehensive and trusted cloud services and global reach creates attractive revenue growth opportunities for both companies."
The deal comes as LSEG is under pressure to ensure its $27 billion purchase of data and trading company Refinitiv is profitable.
Schwimmer hailed the 2019 deal as a means to turn the exchange into a worldwide data and analytics organisation to rival Bloomberg, although integrating the business has been a challenge.
As part of the new deal, Microsoft will use its Azure and AI platforms to provide LSEG with data analytics and cloud infrastructure solutions. It will also integrate its messaging service, Teams, with LSEG's Workspace solution to build a single platform incorporating financial data, analytics and collaboration capabilities.
LSEG will move its data platform, as well as other crucial technological infrastructure, into Microsoft's Azure cloud.
The two businesses aim to help investment firms develop financial models using Microsoft's machine learning capabilities.
Under the terms of the 10-year deal, Microsoft requires LSEG to spend a minimum of $2.8 billion on cloud-related items.
This is 'consistent with existing long-term' expenditure plans, according to the stock exchange.
Microsoft estimates that over the next 10 years, this alliance and wider market opportunities it unlocks could bring in as much as $5 billion for the company.
According to the agreement, Scott Guthrie, EVP of Microsoft's cloud and AI group, will be appointed as a non-executive director of LSEG, subject to appropriate approvals.
"Advances in the cloud and AI will fundamentally transform how financial institutions research, interact, and transact across asset classes, and adapt to changing market conditions," said Satya Nadella, Microsoft's chairman and CEO.
"Our partnership will bring together the industry leadership of the London Stock Exchange Group with the trust and breadth of the Microsoft Cloud - spanning Azure, AI, and Teams - to build next-generation services that will empower our customers to generate business insights, automate complex and time-consuming processes, and ultimately, do more with less."