London Stock Exchange ‎rebel TCI gives backing to new chief

The activist investor who laid siege to the London Stock Exchange Group's (LSEG) boardroom last year has given its backing to the choice of a new boss on the eve of its annual meeting.

Sky News has learnt that Sir Christopher Hohn, who runs The Children's Investment Fund Management (TCI), told its investors late last week that he welcomed the announcement of former Goldman Sachs (NYSE: GS-PB - news) executive David Schwimmer as LSEG's next CEO.

The remark paves the way for a smooth departure from the stock exchange-owner for Donald Brydon, who announced that he would step down in 2019 following the governance crisis which engulfed the company in the latter months of last year.

Sir Christopher requisitioned an extraordinary meeting of LSEG shareholders to oust Mr Brydon and reinstate Xavier Rolet, the former chief executive, who left amid tensions with boardroom colleagues.

The TCI chief suggested it would be "difficult to find a new world-class CEO to serve under Donald Brydon", but last week's endorsement of Mr Schwimmer's credentials implies that he has now changed his mind.

TCI, which owns about 5% of LSEG, has not publicly agitated for Mr Brydon's removal at this year's AGM, which takes place on Tuesday.

Sources said that the outgoing chairman was expected to refer to the recommendations of a review undertaken by Simon Collins, the former chairman of KPMG UK, who Mr Brydon asked to examine the circumstances surrounding last year's boardroom crisis.

Sir Christopher has repeatedly predicted that the LSEG would receive a takeover bid from either CME Group (Kuala Lumpur: 7018.KL - news) , which owns the Chicago Mercantile Exchange, or the New York Stock Exchange's parent, Intercontinental Exchange (NYSE: ICE - news) (ICE).

Last year, a merger with the German exchange group Deutsche Boerse (IOB: 0H3T.IL - news) fell apart at a late stage, while the sector has seen a flurry of other deal activity in recent months.

The LSEG has a market value of nearly £14.75bn, making it one of the industry's largest companies.

Its clearing house, LCH Clearnet, dominates the market for euro clearing, and draws regular interest from rival exchange owners.

One source suggested that "a small minority of investors" were likely to vote against Mr Brydon on Tuesday, but said the figure would be smaller than the roughly 20% who opposed his continued tenure at December's EGM.

A TCI spokesman would not comment on whether the hedge fund had cast its votes against the incumbent chairman.

TCI's efforts to remove Mr Brydon last year were undermined by Mark Carney, the Bank of England Governor, who made a rare public intervention into the row by effectively backing the board's position.

The row sparked by Mr Rolet's "retirement" stunned the City because he had planned to leave in any case if the Deutsche Boerse merger had been completed.

TCI had originally sought Mr Rolet's reinstatement, but Mr Carney's remark that "all good things come to an end" led the former LSE Group boss to declare that he would not return "under any circumstances".

The LSEG declined to comment.