Private equity, exchanges expected to bid for Tradeweb

Tradeweb Markets LLC, the bond trading platform, will likely see interest from private equity and exchanges if it chooses to sell, sources said.

Tradeweb has yet to decide its fate. Blackstone and Thomson Reuters Corp have held talks with Tradeweb’s many shareholders about holding a sale or IPO this year, Bloomberg reported on March 20. A sale or IPO of Tradeweb would likely value the company at more than $4 billion, the story said.

Tradeweb is backed by several banks. In 2007, nine investment banks bought a minority stake in Tradeweb for about $180 million. The seller was Thomson Corp (now Thomson Reuters). The investors included Merrill Lynch (now Bank of America Merrill Lynch), Goldman Sachs, JP Morgan Chase, Credit Suisse, Lehman Brothers (Barclays), Morgan Stanley, Deutsche Bank, Royal Bank of Scotland and UBS. Thomson Reuters owns 51 percent of Tradweb.

In January, Thomson Reuters confirmed that Blackstone was buying a 55 percent stake in its financial and risk unit. Any Tradeweb transaction won’t happen until that deal is done, the story said. Blackstone and Thomson Reuters consider an IPO the more likely option for Tradeweb, Bloomberg said.

Sources, however, think a Tradeweb sale is the more efficient and better option, especially in the current bull market. Strategics continue to be very acquisitive while companies are selling for high valuations, sources said. Going public doesn’t provide an efficient exit, with investors often having to hold onto shares for several quarters, bankers said. Selling provides more certainty for Tradeweb’s many shareholders, people said.

“Tradeweb is more likely to sell in this environment than go public,” one of the sources said. “It’s the more popular path right now.”

A Tradeweb auction will likely attract exchanges like MarketAxess or NYSE owner Intercontinental Exchange, sources said. Bloomberg, which owns Tradebook, could also be interested. Private equity would also likely bid for Tradeweb with large buyout shops like Permira or KKR or CVC Capital Partners potentially interested, sources said.

CME Group, however, is one strategic that may not be bid for Tradeweb. Last week, the world’s largest futures exchange confirmed that it made a preliminary approach regarding a takeover of NEX Group plc. CME, of Chicago, owns the Chicago Mercantile Exchange, Chicago Board of Trade, NYMEX and COMEX. In late 2017, CME began trading Bitcoin futures. Nex, of London, is an electronic trading platform founded by Michael Spencer.

CME is considering whether to turn its preliminary discussions into a real offer; it has until April 12 to decide, the Financial Times said. CME’s pursuit could be derailed by rival exchanges, City A.M. reported. The London Stock Exchange, Singapore Exchange, Deutsche Boerse and Intercontinental Exchange could make an offer for NEX, the story said. Blackstone is no longer considering bidding, City A.M. said. UPDATE: CME on March 29 made a $5.5 billion offer to buy NEX. The deal creates a cross-border powerhouse for investors trading in the multitrillion-dollar foreign exchange and government debt markets, Reuters said.

Executives for Tradeweb, Blackstone, Goldman Sachs, JP Morgan, Credit Suisse, MarketAxess, Ice, Permira, CVC, UBS and Thomson Reuters declined comment.

Action Item: For more information, contact Tradeweb CEO Lee Olesky call (800) 541-2268

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