Microsoft has agreed to buy a £1.5 bn stake in London Stock Exchange Group as part of a 10-year strategic partnership between the US software company and the 300-year-old UK exchange.
The deal marks the latest tie-up between finance and Big Tech. In November, Google invested $1 bn in Chicago-based CME as part of a 10- year cloud computing deal; Nasdaq and Amazon Web Services agreed a similar partnership last year. Under the agreement, Microsoft will buy a 4 per cent stake in LSEG worth about £1.5 bn from Blackstone, Thomson Reuters, Canada Pension Plan Investment Board and Singapore’s sovereign wealth fund GIC.
Microsoft will help improve the exchange’s data and analytics and the companies said LSE’s revenue growth would increase “meaningfully” over time as new products were developed via the partnership. Shares in LSEG rose 4 per cent after the announcement. As part of the deal, Microsoft will provide LSEG with data analytics and cloud infrastructure products using its Azure, AI and Teams platforms. The two companies plan to develop digital market infrastructure based on cloud technology.
They plan to use Microsoft Teams to connect users. They also intend to use Microsoft’s machine learning capabilities to help investment groups “avoid the labour-intensive and expensive process of creating models from the ground up.”
Financial trading platforms were for a long time seen as being out of reach of cloud companies because of the high speed requirements, but the string of new alliances underscore how that has changed as cloud capabilities improve. Under the terms of the deal, LSEG must spend £2.3bn at Microsoft over the 10-year partnership, “reflecting minimum cloud consumption expectations“.