Microsoft buys stake in London Stock Exchange Group in data collaboration

Microsoft has become a shareholder of the London Stock Exchange Group (LSEG) as the two firms agree to a 10-year partnership to build new data and analytics products.

The US technology giant will take a 4% stake in the LSEG from the Blackstone/Thomson Reuters Consortium.

As part of the deal, the two firms will work together to jointly develop new products and services for data and analytics using its Microsoft Azure, AI and Teams platforms.

It will also develop LSEG’s own data platform using the Microsoft Cloud, which is expected to improve significantly the experience for traders and its customers across the financial markets.

The collaboration will lead to “attractive revenue growth opportunities” and is expected to result in a revenue boost for LSEG as it introduces new products over time, it said.

The group told investors that the total costs for the partnership could be between £250 million and £300 million over the next three years, which could hit its profit margins during that time as a result of the one-off costs.

Furthermore, LSEG said it has committed to a minimum cloud-related spend with Microsoft of 2.8 billion US dollars (£2.3 billion) over the 10-year partnership, with any further spending depending on the success of the collaboration and the demand for its data platform.

David Schwimmer, the chief executive of LSEG, said: “This strategic partnership is a significant milestone on LSEG’s journey towards becoming the leading global financial markets infrastructure and data business, and will transform the experience for our customers.

“We are delighted to welcome Microsoft as a shareholder. We believe our partnership with Microsoft will transform the way our customers discover, analyse and trade securities around the world, and create substantial value over time.”

Microsoft added that the partnership will help its customers to “do more with less” as a result of more efficient services.

In line with the new partnership, Microsoft’s executive vice president of its cloud and AI group, Scott Guthrie, will be appointed as a non-executive director of LSEG in due course and subject to approvals.

Shares in LSEG were up by 4% on Monday morning.