So, post the acquisition, approximately 70% of revenues for the London Stock Exchange Group come from providing data and analytics services where there is really strong structural demand. Those revenues are recurring, they’re subscription-based, and that provides some really good resilience. And the cash generative nature of the business means that, actually the balance sheet – having been a little bit stretched post-Refinitive – is now strengthening really quickly. And I think that for a business like London Stock Exchange Group, where revenue growth can accelerate, the benefits of the acquisition are starting to come through, that can lead to the company becoming more valued as a really, really high quality leading information services company with the capability to deliver many years of strong growth to come.
And, you know, if the market is willing to depress the valuation from macro concerns, that’s just an example of a really high-quality company that was a little bit expensive, but we were very happy to add to the portfolio and, and own to the next five or 10 years.
(CS):
When we talk to people about the UK and the sort of fears about the outlook, and I know you’re not too focused on the outlook, it’s all on the companies, but M&A activity must come onto the radar at some point for anyone including yourselves. Could you maybe just talk to us about whether you’ve seen that in the portfolio, and do you sort of extrapolate that into your outlook for companies, or is it just purely on a case-by-case basis?
(CL):
Yeah, so we have noticed that in the portfolio. So recently Schneider Electric announced they were considering making a bid for the part of Aveva, the software company that they don’t own. Our holdings of HomeServe and Euromoney have been bid for by private equity in the last six months or so. A year ago, John Laing & Son which were also a holding were also bid for by private equity. And there have also being sort of plenty of rumors about other companies in the portfolio that are being looked at, either by other corporates or by private equity.
And, I guess, the sort of level of M&A activity in the portfolio isn’t that surprising, particularly from private equity as you know, it’s one group of buyers that have a lot of dry powder, the characteristics that they tend to look for dovetail with the sort of quality income strategy that we have in the portfolio, such as, you know, strong business model, a robust balance sheets, good long term growth opportunities. And you know, of course, valuations have come down to attractive levels as well. So, at the moment, I’d say a fair proportion of portfolio is probably vulnerable to M&A activity.