On a flight back from Istanbul a few years ago, Erik Engstrom, chief executive of UK-listed Relx, walked straight past some of his Wall Street bankers sitting in business class to take his place in the economy section.
The moment summed up Engstrom’s approach to corporate life, according to those close to the Swedish boss, whose profile is so low that he has only managed one interview in 15 years as chief executive.
In that time, the data, publishing and analytics company has added more than £50bn to its market capitalisation, catapulting it into the top 10 biggest companies in the UK in recent months. Relx has outperformed the FTSE 100 for 12 of the past 13 years.
“He really is pretty unflashy,” says Thomas Singlehurst, head of European media equity research at Citi. “But he has delivered reliably and without fuss, year in, year out, for his whole time at Relx.”
The 60-year-old is one of the best paid in the FTSE, taking home £8.5mn in 2022 and £13.6mn in 2023, but appears to live a modest life. The former McKinsey consultant travels by tube and eats lunch at places such as Itsu, according to those who work with him, with no company car or private jet paid for by shareholder funds.
Despite overseeing the sort of tech-led corporate growth that the government has been hoping to foster in London’s listed market, he is not part of the carousel of executives regularly feted by Downing Street.
“He’s very quiet and unassuming, very thoughtful, highly competent, consistent and clear,” said one top shareholder. “Most CEOs say that they’re long term, he’s just done it”.
Relx’s London headquarters have not been refurbished for 25 years — and it shows, according to insiders — with fewer than 100 people working in an office deliberately kept lean to keep the focus on its profitmaking operations.
Those profits at Relx — which was known as Reed Elsevier until a 2015 rebrand — have kept investors and analysts happy despite his low profile.
Relx, or its previous incarnations, has been the top-performing stock on the FTSE 100 in the index’s 40-year history, according to London Stock Exchange data. Since Engstrom became chief executive in 2009, its share price has soared 650 per cent — from about 465p to more than 3,489p — and total shareholder returns (reinvesting dividends) have been more than 1,000 per cent. This means that the company has outperformed the FTSE 100 by 328 per cent in that period.
Last week, the group said that it would buy back £1bn of shares in 2024, and proposed increasing its full-year dividend by 8 per cent.
British fund manager Nick Train has had Relx as the biggest holding in the Lindsell Train UK equity fund since its inception in 2006, only selling shares when price rises take them above the 10 per cent maximum position size.
He said: “The best-performing constituent of the original FTSE 100 has been Relx, turning a £100 investment into £35,000 since 1982 and, indeed, up 39 per cent in 2023.”
Train recently met Engstrom — who keeps a close relationship with investors — saying “it is clear that the company’s strategic advantages and its growth opportunities are better than ever”.
The company’s strategic direction rarely changes quickly or unexpectedly, although over time Engstrom has overseen a steady shift in the business from legacy print operations to data and analytics, which have underpinned its financial success. Print revenues have fallen from about 27 per cent to 5 per cent during his tenure.
One top shareholder described him as “one of the great incrementalists of UK business”, adding: “His real talent has been to plough an incredibly consistent furrow. It’s been a very steady deliberate strategy of investing organically, taking content sets in print formats and digitalising them.”
Just weeks after taking charge in November 2009, he surprised analysts by saying that a strategic review was not “necessary”.
Since then, he has disposed of businesses unable to make the digital shift and added operations to fill gaps but has kept core operations together.
Relx is essentially a holding company with three divisions spanning legal, risk and scientific data and solution services, alongside a separate events business. During his early years, analysts asked whether he should dispose of one — LexisNexis — which at the time would have raised about £2bn. Now this division is worth more than the market cap of the company in 2012.
“By keeping the businesses and investing in them he’s been able to create much more value than if he had broken up the business a decade ago,” said the investor.
“Some might see that as boring — but the value creation he’s achieved is far from boring.”
The overarching approach is about predictability, according to analysts and staff, and simple aims such as keeping cost growth below revenue growth.
Engstrom has sought to iron out shocks, focusing its operations on global, rather than domestic, markets and moving away from cyclical sectors, according to one senior staff member.
It is still valued at lower than US peers, but executives at the group say that they do not feel the pressure to move its listing to New York. Instead, one added, it is UK-based investors who tend to raise the topic seeking reassurance that the company would stay in London.
Engstrom declined to comment.
However, the company now has some innovations to start shouting about, with the increased use of AI in its legal services arm and other parts of the business.
It is using machine learning and artificial intelligence based on its vast data sets, with three generative AI products so far: Lexis + AI, which can help lawyers draft and analyse documents; Scopus AI, an academic search tool; and Clinical Key AI, which provides medical information.
For all Engstrom’s unflashiness, these innovations mean Relx is well positioned to take advantage of the market clamour for AI, which helped push Nvidia to historic highs this week.
Train says that “in our view, the story for Relx’s shares is still only just getting started,” adding: “Relx is justifiably a proxy for the data/AI bull market, that can still be purchased on a lower valuation than its global peers.”
With additional reporting by Patrick Mathurin in London
