The London Stock Exchange reported today strong revenue growth in its first quarter, driven by a flurry of new issues. And it suggested a merger with a European rival might still be in the offing.

In its fiscal first quarter (three months ended June 30), the LSE’s revenues increased 13%, compared with the same quarter a year ago, to £67.7 million. This performance was the result of strong new issue activity and increased trading volumes.

The exchange said the rise in revenue mainly reflects the increase in the number of new and secondary issues on its Main Market and the continued success of the small cap Alternative Investment Market in attracting new companies. In the quarter, there were 184 new issues on the exchange’s markets (compared with 92 in 2004) including 82 in June, the highest monthly number in eight years.

The number of new issues in the first quarter on the Main Market more than doubled to 37 (from 16 in 2004). AIM hosted a total of 147 new issues compared to 76 in the corresponding period last year. Also, secondary issues rose to 308 from 211 on the Main Market.

All of this new activity has attracted several Canadian brokerage firms to London in the past year to take advantage of the opportunity offered by the AIM — a move pioneered by Vancouver’s Canaccord Capital Corp.

“This strong start to the new financial year demonstrates why our confidence is high. It also explains why the other two leading European exchanges have been so keen to acquire the London Stock Exchange,” said LSE
chairman Chris Gibson-Smith.

The LSE received unsolicited approaches by both the Deutsche Borse and Euronext last December. Gibson-Smith said that the exchange’s board, “has retained an open mind about the advantages of a possible combination. We recognize that if the right terms are achievable, a combination could be in the best interests of our shareholders. But this means there must be something in a combination which meets the expectations of investors, our customers and the many other stakeholders whose livelihoods depend, at least in part, on the health and future prosperity of the London Stock Exchange.”

http://www.londonstockexchange-ir.com/lse/news/releases/2005/2005-07-13a/