LSEG to pay nearly 12 times forecast revenue for data firm Octus

London Stock Exchange Group (LSEG) agreed on 22 October to buy Octus, a New York-based provider of credit data and intelligence, for $3.535bn (£2.64bn) in cash. The sellers are funds for which Permira, the private equity firm, acts as adviser, and Octus’s management, including Kent Collier, who founded the business in 2013. LSEG announced the deal on the same morning as its third-quarter trading update, in which it raised its full-year guidance for revenue, margin and cash flow.

Octus is expected to generate more than $300m (£224m) of revenue in 2026, with what LSEG describes as strong double-digit growth and an adjusted margin of earnings before interest, tax, depreciation and amortization (EBITDA) of around 40%. At the headline price, LSEG is paying just under 12 times that revenue figure. The purchase will be financed with external debt, and LSEG expects it to close in the first half of 2027, subject to regulatory approval.

According to LSEG’s announcement, Octus’s teams “source hard-to-access credit documentation, including covenants and deal terms, and turn it into structured, searchable data”. Customers reach that data through Octus’s own platform, “an MCP connector or via AI workflows”. MCP, the Model Context Protocol, is an open standard that lets AI assistants query outside data sources.

LSEG’s trading update, published the same morning, says AI is adding to demand for the data the group already sells. The Octus price puts a number on what that demand is worth when the data is proprietary and the documents behind it are hard to access.

What LSEG’s AI figures show

Total income excluding recoveries rose 8.8% on an organic constant currency basis in the third quarter, to £2.41bn. LSEG now expects growth of at least 8.0% for the full year, up from the 7.0–7.5% it guided at the half year. “LSEG is on track to deliver its strongest annual growth since 2018,” said David Schwimmer, chief executive.

LSEG says 95% of its top 200 customers use its AI products and more than two-thirds of its top 50 Data & Analytics customers have connected to its MCP servers. Consumption through that channel grew fivefold quarter on quarter. Users of its Workspace AI Search tool reached 47,000, up 30,000 since its half-year results in mid-July.

LSEG also says 80% of the AI agreements it has struck with customers so far involve the purchase of additional datasets. The group says it remains on track to make the majority of its data available through MCP by the end of the year, and it expanded its partnership with OpenAI during the quarter so that its data is available in more of the AI products customers use.

Paying for hard-to-access credit documents

Octus has more than 900 employees, 750 customers and more than 40,000 individual users, including buy-side firms, investment banks, law firms and advisory firms. LSEG says Octus is particularly strong with hedge funds and alternative investment managers, where LSEG has “historically been under-penetrated”.

LSEG puts the private credit industry at an estimated $3.5tn and the private markets data, workflow and access segment that Octus serves at $7–9bn, expected to grow at a double-digit rate. Covenants and deal terms in private and distressed credit sit in documents that LSEG itself calls hard to access. Octus’s teams obtain those documents and turn them into structured data, which also feeds its own workflow and portfolio management tools.

Schwimmer’s statement on the deal leads with that content rather than with Octus’s software. “Combining Octus’ leading proprietary data and intelligence with LSEG’s data and analytics business creates a powerful offering for our customers, and further accelerates our growth,” he said.

What the price says to founders

For founders and boards of data-led software businesses, the deal gives a public reference point. Octus has grown revenue at a double-digit compound rate since 2022, according to LSEG, and it sells both through its own platform and through connectors into customers’ AI tools. A strategic buyer has now agreed to pay close to 12 times expected 2026 revenue for that combination, financed with debt and with the founder staying on.

Collier, Octus’s founder and chief executive, will continue to run the Octus businesses after completion, reporting to Gianluca Biagini and Ron Lefferts, co-heads of Data & Analytics. “Joining LSEG will pair our data, intelligence and workflows with global distribution and fixed income depth,” Collier said.

LSEG says the deal will be neutral to adjusted earnings per share in the first full year after completion and accretive after that, and immediately accretive to organic revenue growth in Data & Analytics. That division grew 5.2% in the third quarter, against 12.5% in Markets, 10.2% at FTSE Russell and 9.8% in Risk Intelligence. Within it, Workflows, which includes the Workspace platform, grew 2.8%.

LSEG has agreed to spend $3.535bn to add a business growing at double digits to its slowest division, at a time when most of its AI agreements with customers include extra datasets. The price puts a public value on credit data that Octus’s own teams source from hard-to-access documents and that customers can take through an MCP connector as well as through Octus’s platform.