The London Stock Exchange (LSE) has expanded its reach in Europe with an agreement today to acquire a nearly five per cent stake in clearing house Euroclear.
The LSE said today it will buy an aggregate 4.92 per cent stake in Euroclear’s share capital for €278.5m (£241.9 million).
Brussels-based Euroclear provides settlement, custody and collateral management services across Europe with €28.2tn in assets under custody.
The LSE said its investment is expected to strengthen the existing relationship between the pair and provide further opportunities for commercial collaboration and product development.
The Intercontinental Exchange has also built a stake in Euroclear, and French bank Societe Generale sold a 2.05 per cent stake in Euroclear to Belgian state-owned financial firm SFPI in November.
An LSE representative is expected to join Euroclear’s board.
The deal will be funded from existing cash and debt facilities and the LSE said it expected its adjusted net debt to earnings will remain within its target range of one to two times following completion. It said it expects the deal to add to its earnings.
LSE chief executive David Schwimmer said: “Both LSEG and Euroclear share the same open access philosophy and a customer partnership approach which is central to our businesses. We look forward to working with Euroclear to drive continued innovation and efficiencies for the benefit of our customers and the wider market.”
Euroclear chair Marc Antoine Autheman said: "The addition of LSEG to our shareholder base reflects the attractiveness of a neutral open architecture model to players in the capital markets ecosystem, including other financial market infrastructures. We look forward to working with LSEG as we continue to contribute to bringing greater efficiency, stability and safety to the global financial markets.”