UPDATE 3-LSE unveils $1.6 bln rights issue for Frank Russell deal

Fri Aug 22, 2014 2:03pm EDT
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* LSE to raise $1.6 bln in 3 for 11 rights issue

* Shares offered at 1,295 pence, 30.1 percent discount

* LSE Q1 operating profit up 36 percent

* Shares close up 1.2 percent (Adds Russell's H1 results, estimated earnings for combined group, updates share price)

By Pamela Barbaglia and Clare Hutchison

LONDON, Aug 22 (Reuters) - London Stock Exchange Group Plc is raising 938 million pounds ($1.6 billion) in its first rights issue of new stock to part fund the acquisition of U.S. indexes group Frank Russell.

Europe's oldest independent bourse unveiled plans to buy Frank Russell for $2.7 billion in June to move deeper into the U.S. financial services market, where half of global assets under management (AUM) are based. LSE said then it would help fund the purchase by issuing new shares.

The exchange said on Friday it would offer 74,347,813 new shares at 1,295 pence apiece, a 30.1 percent discount to their Aug. 21 closing price. Shareholders will have the right to buy three new shares for every 11 already held.

The deal gives LSE, owner of indexes business FTSE, third place in the booming market for exchange traded funds (ETFs), low-cost funds giving an alternative to active fund management, after market leaders S&P Dow Jones and MSCI.   Continued...