CaseStudy
Taking Stock
Premal Parekh and his finance team played a vital role in integrating a data and analytics business into the London Stock Exchange Group while also finding efficiencies
Words Richard Crump Photography Richard Gleed
Taking Stock
Premal Parekh and his finance team played a vital role in integrating a data and analytics business into the London Stock Exchange Group while also finding efficiencies
Words Richard Crump Photography Richard Gleed
Project Casebook
Company data
Revenue
Profit
Staff
Results
EBITDA
Subscriptions
Subscribers
The challenge
Integrating a major acquisition while harnessing data and analytics capabilities
Finance
Headcount: Finance in LSEG is over 1,000 globally.
Key teams: In Parekh’s role, he had a lean direct team of 10 and had dedicated (dotted line) finance teams, which totalled around 25
Approach
Cost-saving through major outsourcing and offshoring activity, and business process transformation programmes.
Targets
Five-year synergy target of £350m per annum.
In 2022, LSEG increased its target to at least £400m by the end of 2025, having delivered £297m by the end of 2022.
Future plans
Following the acquisition of Refinitiv, LSEG is shifting from a period of integration to one of transformation. As digital technology becomes more integral to all sectors of the economy, data is becoming increasingly important as the foundation of digital trade. LSEG aims to benefit from the shift to a data economy.
A £27bn turning point
In January 2021, London Stock Exchange Group, the company that owns London’s 300-year-old exchange, completed a £27bn deal to acquire data and analytics firm Refinitiv.
For anyone working at Refinitiv at the time, the previous two years had been transformational at the business, having spun off from Thomson Reuters to Blackstone in a private equity carve-out just two years prior.
The impact on LSEG, though, would be enormous, as it shifted from stock and commodity trading information to one of the world’s largest financial data groups.
Premal Parekh and his team played a key part in making it happen. Initially, they were tasked with supporting the separation from Thomson Reuters, delivering savings across both the real estate and procurement functions, and getting the functions’ due diligence ready for the acquisition by LSEG.
They were also responsible for looking after the real estate portfolio of over 150 commercial offices around the globe, with a £250m cost base. Once LSEG’s acquisition of Refinitiv was completed, Parekh’s responsibilities expanded from not just looking after real estate to include operational excellence, data governance, corporate operations, and procurement as finance director, corporate real estate and group COO investments.
THE SECTOR
Financial services, data and analytics
THE CHALLENGE
Integrating a major acquisition while harnessing data and analytics capabilities
THE OUTCOME
Refinitiv successfully integrated into LSEG and 10-year reciprocal analytics deal with Microsoft
LSEG went from being a business driven by share trading and IPOs to having a data analytics business with over 90% retention
From stocks to data
The acquisition of Refinitiv – LSEG’s largest – transformed the company, shifting the emphasis away from listings and trading to data. Now LSEG derives only 4% of its revenues from listing and trading cash equities, while two-thirds come from its data and analytics business.
“LSEG went from being a business driven by share trading, listings and IPOs to having this data analytics business which has over 90% retention,” Parekh says.
In its 2022 annual report, LSEG declared its “strategy is working” as it reported that pre-tax profits had risen 38.8% to £1.24bn as total income rose 19.6% to £7.43bn, which it attributed in part to the successful integration or Refinitiv.
Parekh says he and his team supported the chief operating officer’s leadership team and were responsible for the day-to-day running of the real estate portfolio and were tasked with finding savings through the integration of Refinitiv.
This included shepherding major outsourcing and offshoring activity, and business process transformation programmes to create value and deliver cost savings.
“That’s real estate, consolidation, rightsizing, downsizing and relocation, along with business-wide process transformation with LSEG’s Lean Six Sigma qualified and operational excellence team,” Parekh says.
LSEG went from being a business driven by share trading and IPOs to having a data analytics business with over 90% retention
Trimming the fat
Financial targets announced by LSEG at the time of the transaction included a five-year cost synergy target of £350m per annum. In 2022, LSEG increased its target to at least £400m by the end of 2025, having delivered £297m by the end of that year. Those savings were achieved by consolidating LSEG’s property footprint, closing data centres, renegotiating agreements with strategic suppliers and deduplicating roles where appropriate. For many workflows, LSEG needed to consider labour arbitrage — onshore vs nearshore vs offshore — and weighing up outsourcing vs insourcing.
Doubling down on data
LSEG has leaned into its data and analytics strategy. It announced a new 10-year strategic partnership with Microsoft in December 2022 to develop a desktop analytics terminal that could potentially rival Bloomberg, the leader in financial market information.
As part of that partnership, Microsoft took a 4% stake in LSEG and agreed to spend 50/50 on product development. Already, LSEG has started rolling out Workspace, which includes Teams communication and Microsoft 365 interoperability and built-in compliance.
LSEG went from being a business driven by share trading and IPOs to having a data analytics business with over 90% retention
Sticky finance
Many of LSEG’s products sit deep within its customers’ workflows, providing valuable data and services. Key to LSEG’s strategy is selling access to data on foreign exchange, debt and equity markets on recurring subscriptions — subscription-based revenues now account for 73% of group income. This is a more “sticky” business to be in, Parekh says.
At the same time, LSEG said it is cross-selling Refinitiv data products to new customer segments while enhancing existing products and building new ones. In 2022, LSEG launched 70 new synergy-related products. LSEG recruited a team of about 80 people “who were all Lean Six Sigma qualified” Parekh says, referring to the set of methodologies and tools used to improve business processes by reducing errors.
“The initial stage involved process mapping. We focused on digitalising upstream processes. And therefore, all of the downstream processes can be then transformed digitally,” Parekh adds. “The financial metrics that run in parallel can be then more accurate, enabling better planning, forecasting, and we’re able to understand where we are leaving money on the table.”
From pubs to Paternoster Square
Premal Parekh has led finance functions in FTSE 100, Fortune 500 and private equity-backed businesses. But one of his formative lessons – about customer experience – came working as a waiter at a pub restaurant chain.
Parekh says his first couple of career experiences, working as a waiter at Brewers Fayre and at department store Selfridges, gave him an insight into what customers want, how employees work with each other, differences in products and service, and what it means to serve different people.
“I still think about some of those experiences now,” Parekh said.
“Taking my lessons learned from Brewers Fayre, which was very value focused, and Selfridges, which provided a premium experience, helped me understand the benefits of having money to invest can make the experience much more curated. Then you can see a real difference in what you can charge and profitability.”
Since those early jobs, Parekh has worked in the finance functions of property developer Berkley, global commercial real estate services firm CBRE — where he was finance director, EMEA project management — before joining the Blackstone-backed Refinitiv business in July 2019 as finance director, corporate real estate, and ultimately the London Stock Exchange Group after its acquisition of Refinitiv.
“This role was fantastic; it is where I learned to look at the big picture and the business more strategically,” Parekh said.
“For example, how can we sell products or procure suppliers more efficiently, and how do we really understand all the processes involved in the cash cycles.”
