The world’s largest inter-dealer broker TP ICAP has taken an underwritten right to issue 225.3 million new ordinary shares at 140 pence a share and valued at £315 Million.
Last October, the company decided to buy Liquidnet for a revised price of about $600 million and issued rights to fund the purchase as well.
TP ICAP also recorded a 1% drop in full-year revenue, which followed the issue of shares and the announcement of the newly acquired Liquidnet electronic trading network.
The company also pointed out that the trading volumes were at subdued levels during much of the fourth quarter.
Deal excites shareholders
The company, listed on the London stock exchange, initially made the publication of the Liquidnet acquisition around September when both parties began talks. The deal is expected to be complete in the next few months after all legal rights have been met. The news of the deal is getting the shareholders excited despite the reported loss experienced last year.
The filing at the London Stock Exchange revealed that the company’s shareholders can buy the shares from the rights issues at a 35.2% discount from the January 6 closing market share price of TP ICAP.
TP ICAP will source additional funds
The company had already made its intentions known earlier, so the right issues didn’t come as a surprise. The purchase amount is far higher than the amount the company will realize from the right issues. So, there are plans to raise extra funds elsewhere.
In addition to the funds received from the rights issue, TP ICAP wants to source an additional $100 million from the existing debt facilities, plus an extra $50 for the final payments for the deal in its third year.
The deal will improve the shareholder value
Chief Executive Officer of TP ICAP Nicolas Breteau stated that the project’s acquisition will help the company’s growth prospects.
He further stated that the deal will accelerate “our stated strategy of electronification, aggregation, and diversification,”
Breteau also stated that what prompted the company’s decision to acquire mmm is the fact that both businesses are highly complementary. Once the deal is finalized, it will help to improve the shareholder value in the long term.
As mentioned earlier, despite the increased activities taking place in the company, TP ICAP’s share trading has not performed as expected, although the percentage drop is only 2% on a reported basis and 1% on a consistent currency basis for 2020.