Key takeaways
- LSEG plans debt-financed acquisition of credit data provider
- Octus purchase values business near twelve times revenue
- Investors face integration costs and higher borrowing exposure
London Stock Exchange Group is preparing to borrow billions to acquire a financial information company generating just over $300 million in annual revenue, placing an unusually large bet on the future of private credit data.
On October 22, LSEG agreed to purchase Octus for $3.535 billion in cash. The business, founded by Kent Collier in 2013, specializes in distressed debt, corporate restructurings and private lending intelligence.
According to LSEG's official announcement, the acquisition will be financed through external debt, with completion expected in the first half of 2027.
The deal raises an important financial question: how much growth must Octus deliver to justify such an expensive acquisition?
Why LSEG Is Paying Almost 12 Times Revenue
Octus expects to generate more than $300 million in 2026 revenue, with an adjusted EBITDA margin of approximately 40%.
Using $300 million as a conservative revenue baseline, LSEG is paying about 11.8 times annual sales. At that same revenue level, a 40% EBITDA margin would imply approximately $120 million in adjusted annual operating earnings before interest, taxes, depreciation and amortization.
That produces a rough purchase-price-to-EBITDA comparison of 29.5 times, although the actual multiple depends on final earnings and transaction adjustments.
The valuation illustrates why proprietary information businesses command substantial premiums.
Coinpaper previously examined how LSEG's original Octus deal reflects demand for information that general-purpose AI systems cannot easily reproduce.
A similar strategy appeared when Thomson Reuters acquired a specialized legal AI startup without any revenue.
The Hidden Cost of Financing a Data Acquisition
LSEG expects its leverage ratio to reach the upper end of its targeted 1.5–2.5 times range by late 2027.
That forecast incorporates the Octus purchase, its planned Trumid acquisition and the completion of a £3 billion share-buyback program.
The company expects leverage to return toward the middle of its target range by the end of 2028, supported by anticipated cash generation.
Unlike an all-stock purchase, borrowing creates financing obligations regardless of whether the acquired company's earnings meet expectations.
This distinction also matters in the AI infrastructure market, where companies increasingly use debt and long-term commitments to finance expansion.
It reflects the broader question of AI investment returns: whether growth produces enough cash to justify the capital committed.
Can Private Credit Data Justify the Price?
Octus serves approximately 750 institutional customers and more than 40,000 users, including hedge funds, investment banks and legal advisers.
Its subscription products cover borrowers and financing arrangements that can be difficult to assess using publicly available information alone.
That expertise is becoming more relevant as private-credit financing expands into data centers and other capital-intensive industries.
LSEG expects Octus to improve organic revenue growth immediately after consolidation, while contributing positively to adjusted earnings per share after its first full year of ownership.
But higher revenue does not automatically produce an attractive acquisition return. Debt-servicing costs, integration expenses and sustained customer demand will determine the eventual financial outcome.
The risk resembles challenges facing companies funding the broader AI debt boom, although LSEG's established subscription business provides a different financial foundation.
