EMEA Secondary Equity Issue: Blackstone consortium's £2.66bn ABB in LSEG

IFR Awards 2023
3 min read
Tom Hill

Block after block

Even in more buoyant times the idea that shareholders could monetise £10bn of stock in a single company in 12 months with the share price still trading up 30% on the year might seem far-fetched.

Yet a range of innovative measures and three successful jumbo accelerated bookbuilds allowed a Blackstone-led consortium to do just that in LSEG, owner of IFR.

The scene was set in December 2022 with Microsoft and LSEG inking a 10-year relationship to embed the latter's financial data into Microsoft products and access its artificial intelligence tools. Microsoft bought a 4% stake in LSEG for £1.7bn from the consortium as part of the partnership, which eased the overhang slightly, but more importantly gave LSEG management a story to tell that boosted its stock price through 2023 despite the heavy selling.

"The feedback from new investors was 'how can it perform with this amount of paper to be sold?'," said Tom Swerling, global head of equity capital markets at Barclays, the only bank to be an active bookrunner on all three ABBs. "The strategic partnership gave tailwinds to allow the stock to perform, which is vital. You can sell very large volumes if the company is performing."

Accelerated offers followed with £2bn sold in March, £2.66bn in May and £2.24bn in September. May’s offering set records as the largest secondary stock sale in EMEA since 2010 as well as the largest ABB ever in the UK, having been upsized on the back of significant demand. All three included retail offerings via PrimaryBid.

“A lot of folks had been in the first transaction, but actually a fair number of them in the second deal were new to the story and had missed the first one and were sort of saying, 'Jeez, have I missed all the upside here?'," said Drummond Rice, head of ECM at Blackstone. “I think between deal one and deal two the mentality across the buyside seems to have changed in that people thought a little differently about how we would be going about this."

Pricing peaked with the second trade at £80.50 per share, though at 5% down it was also the widest discount.

Demand remained unsatisfied to the extent LSEG allowed the lock-up on Blackstone, Thomson Reuters, Canada Pension Plan Investment Board and GIC, which received LSEG shares when they sold Refinitiv in 2021, to be relaxed and September’s offer went on to pull in over £12bn of orders.

Pricing of £79.50 was below the level achieved in May, but the group also sold call options over 8.2m shares to banks that if exercised will give a higher average sale price.

A £750m direct buyback by LSEG was concurrent to September's trade.

While such major liquidity events would usually be expected to weigh on the stock price, shares remained above the ABB price on each occasion and ended the year at £92.74 versus £71.36 at the end of 2022.

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