TP ICAP PLC (LON:TCAP) has agreed the up to US$700mln acquisition of equity dark trading specialist Liquidnet, to be part-funded by a rights issue and a temporary cut in its dividend.
An initial US$575mln consideration will be met by US$100mln of cash from existing debt facilities and a US$425mln rights issue, which has been fully underwritten by HSBC, with completion expected in the first quarter of next year.
A further payment of US$50mln of unsecured loan notes will be paid on the third anniversary after completion, plus up to US$125mln depending on the revenue performance of Liquidnet's equities business over a three-year period.
New York-headquartered Liquidnet is a global electronic trading network with more than 1,000 buyside clients and access to 45 markets worldwide from its dark trading, fixed income and investment analytics divisions.
TP ICAP said its target is for Liquidnet to help boost group profit margins by 3% and, with around £25mln-£30mln investment in the new business over two years after the deal’s completion. The acquisition is expected to be accretive to underlying earning per share by the third year.
The investment will be focused on the expansion of Liquidnet's direct-to-consumer offering for the interest rates market, which TP ICAP believes is underserved despite being the largest asset class by volume in the world.