London Stock Exchange hit by lack of IPOs

LONDON Stock Exchange group (LSE) yesterday announced revenue growth in line with expectations but admitted that it has been hit by sluggish performance in its core capital markets business.

“The group has made a good start to the new financial year, although market conditions have remained weak and the summer period is expected to be quiet,” chief executive Xavier Rolet said.

Total group income was up 10 per cent at £209.5m for the three months to the end of June but income from primary markets dropped by 20 per cent as a dearth of floats reduced earnings from admission fees.

Trading revenue was also down by 15 per cent as investors executed fewer transactions.

However the exchange operator’s decision to diversify into data provision and clearing services has been deemed a success.

At the end of last year LSE took total control of data firm FTSE Group for £450m, enabling it to boost information services revenue by 68 per cent to £75.3m. The group’s purchase of clearing house LCH.Clearnet remains on track to complete by the end of 2012.

“The performance shows the areas the LSE has and is moving into doing better than the traditional LSE businesses,” said Numis analyst James Hamilton. “We believe the LSE is now a more balanced, less cyclical business that is better positioned to deliver growth.”