TP ICAP agrees to buy Liquidnet for up to $700m
Interdealer broker TP ICAP has agreed to buy Liquidnet Holdings for up to $700m as it looks to diversify its customer base.
TP ICAP said it had agreed to buy the electronic trading network for a revised price of between $575m and $700m.
The broker said it would hold a $425m rights issue to raise the funds and slash its 2020 dividend inhalf to minimise dilution of earnings.
From 2021 onwards the board will target a dividend of about two times earnings.
Last month the FTSE 250 firm revealed it was holding advanced discussions to acquire electronic trading network Liquidnet. It is the biggest deal by the firm since it formed four years ago through the £1.3bn merger of Icap’s phone-broking business and its rival Tullett Prebon.
TP ICAP acts as a middleman and its clients are mainly investment banks. This acquisition will boost its customer base among asset managers.
Liquidnet runs private trading venues, dubbed dark pools, which allow investors to make large trades without disclosing their intentions to the wider market.
Liquidnet, which has more than 1,000 buyside clients, will help the broker’s digital push, it said today.
“We believe that TP ICAP’s strong dealer relationships and product expertise are highly complementary to Liquidnet’s electronic capabilities and global buyside customer base,” TP ICAP chief executive Nicolas Breteau said.
“Combined, TP ICAP and Liquidnet will be able to offer our clients compelling electronic trading and analytics solutions, driving sustained growth and shareholder value creation over the medium and long-term”, he added.
The interdealer broker enjoyed blockbuster revenues at the start of the year as market volatility at the start of the pandemic encouraged high levels of trading activity.
By July trading had slowed down and was materially lower than in 2019 but said its guidance of low single-digit revenue growth was unchanged.