October 9, 2015 / 12:57 PM / 5 years ago

UPDATE 1-LSEG's Russell Investments sale a positive despite lower price-analysts

(Adds investor comment, updates share movement)

By Noor Zainab Hussain and Sinead Cruise

Oct 9 (Reuters) - Analysts said the sale of London Stock Exchange Group Plc’s Russell Investments was a positive for the company even though it had received a slightly lower-than-expected price for the asset management business.

London Stock Exchange Group (LSEG) said in a statement after London markets closed on Thursday that it would sell the unit for gross proceeds of about $1.15 billion (748.31 million pounds).

BofA Merrill Lynch analysts said the proceeds were somewhat below their expectations, but the market had been fretting about the sale, and the announcement should put an end to these worries.

The company had put up Russell Investments - a part of the Frank Russell Co it acquired last year - on the block in February. (bit.ly/1WQBhdP)

Trevor Green, head of UK equities at Aviva Investors - a top 30 investor in LSEG - said the exchange operator can now move on and focus on cost synergies and growth opportunities of Russell’s index business.

“Shareholders only have to wait until March next year to hear from the board on further potential shareholder returns,” Green added.

LSEG said on Thursday that the separation of the Russell Index business from Russell Investments was expected to be completed in the first quarter of 2016, following which, the Russell Index would be integrated with the FTSE.

Numis analysts concurred that this was a positive development, as it allowed LSEG’s management to focus on delivering its targeted growth strategy.

While Numis kept its rating on the stock unchanged, it cut its price target to 2,450 pence from 2,500 pence to account for the lower-than-expected sale price.

RBC Capital Markets analysts were of the opinion that the use of the proceeds to reduce the company’s debt was also a positive.

The company, which owns the London Stock Exchange, Borsa Italiana and MillenniumIT, said it would receive net proceeds of about $920 million from the sale after tax and expenses. It expects to use the cash proceeds to reduce debt.

LSEG’s stock recovered from early losses to trade down 0.408 percent at 2,441 pence at 1226 GMT on Friday.

1 British pound = $1.5368 Reporting by Noor Zainab Hussain in Bengaluru; Editing by Anupama Dwivedi and Shounak Dasgupta

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