TA Associates to buy Russell Investments for $1.15 billion

Russell Investments' money management and consultant business is set to be sold to TA Associates for $1.15 billion in cash.

The London Stock Exchange Group announced in a statement Thursday that it agreed to the proposed sale of the consultant and money manager, which has $266 billion in assets under management. The statement said Reverence Capital Partners partnered with TA Associates and will make “a significant minority investment in Russell Investments.”

LSEG said the transaction is expected to close in the first half of 2016; $1 billion will be paid to LSEG in cash on completion, with the $150 million balance paid in four equal cash installments annually, starting in December 2017.

LSEG said it remains committed to maintaining client service and fund performance at Russell Investments until the transaction is completed, and will also “continue to seek to ensure management and employee continuity and to provide strong support for growth and innovation in the business, working closely with TA Associates and Reverence Capital wherever possible.”

LSEG completed its purchase of Russell Investments, which includes Russell's index business, in December. In February, it announced its intention to sell the money management business, while retaining the index business. It said in its statement Thursday that the separation of the index business from the money manager is expected to be completed in the first quarter next year. Russell's index business will then be fully integrated with FTSE.

The deal is subject to customary closing adjustments and regulatory and other approvals, said LSEG.

“This transaction brings together a global asset manager with two of the most experienced private equity firms with significant asset management expertise,” said Len Brennan, president and CEO of Russell Investments, in the statement. “Russell Investments will maintain its operational independence, and TA Associates and Reverence Capital will provide us with strong financial backing, new strategic insights and a commitment to help us continue to deliver innovative investment solutions to our global client base.” Mr. Brennan will continue to lead Russell Investments, and will remain a board member. He will step down from his position on the executive committee of LSEG upon closure of the deal.

The proposed sale follows months of speculation over a buyer. Sources named a number of private equity and potential bidders, and in September, talks with Chinese firm CITIC Securities Co. were said to have broken down.