Logic says: Relx, do not panic – sadly logic could also be briefly provide, says RUTH SUNDERLAND

Life is not fair. Markets certainly aren’t. 

Relx was until recently an unsung super-hero share with a strong track record – probably the best company many investors had never heard of.

Now it has hit the headlines, but as a poster child for the AI sell-off.

Shares, which are down more than 50 per cent in the past 12 months, have been battered even more in the past few days because traders think a new tool from Anthropic, the company behind the Claude AI platform, could capsize its business model.

Erik Engstrom, Relx’s boss, yesterday delivered a characteristically robust set of full-year figures: revenues up 7 per cent, dividends likewise, and £2.25billion to be returned to investors this year through share buybacks. 

Markets seemed unimpressed, but there is a strong case for the defence.

Sell-off: Shares in analytics and information business Relx have fallen 35% in a month amid fears AI could capsize its business model

Two of the company’s four divisions are not affected by generative AI, namely the exhibitions and the risk businesses. 

The latter, the biggest division, focuses on financial crime and insurance risks using extractive AI.

The value destruction is based on the perceived vulnerability of the legal division, the company’s fastest growing. Engstrom argues AI will drive growth, not wipe it out.

Relx is developing its own AI tools such as Protégé, a personalised generative and agentic assistant designed for legal and tax professionals, integrated into its LexisNexis database. 

This has 160 billion legal documents, with a million more being added every day.

The company’s relationships with tens of thousands of law firms is based on their trust that the information it provides is real and not hallucinated, in scenarios where errors would be highly consequential.

Engstrom might also point out that Relx’s history, dating back to the Kent paper mills of the 19th century, is one of consistent evolution and embrace of new technologies. 

The company was a member of the FTSE 100 when it was created in 1984 – before many of the traders marking its shares down were even born – and remains one of only a handful still in the index. 

Investors with a long-term horizon – including me, having bought a small number of shares last year – may take the view it remains a good business.

The caveat is that, in the current climate, negative narratives are hard to shift. Passive funds have become more dominant and stockpickers don’t have the same clout to act as a corrective.

Logic says don’t panic, but logic may be in short supply.

End of an era

Schroders shares had fallen by more than a fifth over the past five years before buyer Nuveen hove into view.

Its £9.9billion offer for investment manager Schroders comes at a hefty premium.

So it is easy to see why the family – represented on the board by non-executive directors Leonie Schroder and Claire Fitzalan Howard, both descendants of the founder – would want to take the exit.

One of the grandest firms in the City – founded in the Napoleonic Wars, its Barbican headquarters were opened by the late Queen – Schroders had struggled to get to grips with fast-changing markets.

The 14th generation of the dynasty, which owns more than 40 per cent, had seen their wealth shrink by a couple of billion pounds before this bid came along, which is not to be taken lightly.

Is it really such a great deal, though? The shares were up by nearly 30 per cent on the announcement, within shouting distance of the offer price.

Richard Oldfield, the chief executive who took over in late 2024, is only part-way into a three-year recovery plan he announced last year, but markets were not reflecting the progress made.

If this deal goes through, it will mark the end of one of the most historic names in the City as an independent institution.

With it will go one of the vestiges of another once-great bastion, Cazenove Capital, once the Queen’s stockbroker and a wealth manager to the uber-rich, bought by Schroders a dozen or so years ago. 

The investment banking side of Caz was separately swallowed up by JPMorgan Chase.

The Schroders brand and the headquarters in London will live on, at least for a while. But it will be a blow to the London Stock Exchange, which has seen an exodus of companies and an IPO drought.

There is little room for nostalgia in the Square Mile, but even the most unsentimental would concede that it is a sad day for the City.