Microsoft has agreed to buy a 4% stake in the London Stock Exchange Group as part of a 10-year partnership that will revamp the U.K. company's data infrastructure, the companies announced Monday.
LSEG is slated to spend at least $2.8 billion on cloud computing with the tech titan over the next decade, migrating its data platform and other technology to Microsoft's Azure cloud platform. The companies also said they would work together to develop data analytics and modeling solutions.
"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," LSEG Chief Executive David Schwimmer said in a prepared statement. "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."
This partnership is the latest move by LSEG to ramp up its analytics capabilities, following its acquisition of the data and infrastructure firm Refinitiv for $27 billion from Blackstone Group and Thomson Reuters in January 2021. Since then, LSEG has moved more than 50% of users from legacy platforms, the company says.
LSEG said it plans to enhance Workspace, its existing data and analytics solution, by integrating it with Microsoft tools such as Teams and Microsoft 365. The companies said they plan to develop a product that, for the first time, allows LSEG customers to connect with other customers within and outside of their organizations using Microsoft Teams.
Redmond, Washington-based Microsoft and LSEG will use Azure Machine Learning to work on cross-asset and sustainability analytics and models that banks can use from Workspace and developer-friendly APIs.
LSEG said the partnership is expected to "meaningfully" increase revenue growth over time, and projects cash costs from 2023 to 2025 of between $300 million and $379 million, including about $122 million in capital expenditures.
Microsoft will buy its 4% stake in the U.K. exchange from the Blackstone/Thomson Reuters Consortium, and plans to place Scott Guthrie, Microsoft's executive vice president of the cloud and artificial intelligence group, on LSEG's board. The transaction is expected to close in the first quarter of 2023.
Microsoft Executive Vice President and Chief Commercial Officer Judson Althoff said in a prepared statement that the company is partnering with LSEG because it believes digitizing the industry requires a long-term relationship, co-innovation and partnerships between market leaders.
"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," Microsoft Chairman and CEO Satya Nadella said in a prepared statement.
Microsoft has worked on developing relationships with major financial institutions, including UBS,
