REMINDER: Our user survey closes on Friday, please submit your responses here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Thanks andsoforth. I am aware of the European numbers.
Europe to end 2019 came in with a fall in revenues to £99.8m ($125m) from £107.7m so still contributing a significant chunk of global revenues.
US delivers a similar amount at around $125m
Asia is now around $42m and
Canada at $10m
and hence $302m for global.
The US has been a bit of a thorn and has had years significantly higher.
One employee has voted with her feet:
"Phiona Tam joins [BMLL] from Liquidnet, where she was Product Manager for Electronic Trading, specialising in algo and block trading products. Prior to that she was a Business Analyst, Technologist and Developer at Credit Suisse."
Thanks Roley. Very much appreciated. I cannot argue against anything you have said, but remain disappointed that I cannot see any Liqidnet financial details. Here is the Liquidnet Europe statement for last year:
https://s3.eu-west-2.amazonaws.com/document-api-images-live.ch.gov.uk/docs/Pg7LXwUEm-Mpz_5CdegUwH5QYDt9_p35q3Yvwkt6o5U/application-pdf?X-Amz-Algorithm=AWS4-HMAC-SHA256&X-Amz-Content-Sha256=UNSIGNED-PAYLOAD&X-Amz-Credential=ASIAWRGBDBV3KTHHHQX4%2F20201001%2Feu-west-2%2Fs3%2Faws4_request&X-Amz-Date=20201001T100404Z&X-Amz-Expires=60&X-Amz-Security-Token=IQoJb3JpZ2luX2VjEEYaCWV1LXdlc3QtMiJIMEYCIQDRhayhhKE6rrGZrDSSMj7oXGwZJcKAfaxlSEuSLM1kfQIhAL4rvlTfP7ohhCgxWv2N6WCmBss1Ps5Dgrjbi2x%2Bm5zMKrQDCG8QAxoMNDQ5MjI5MDMyODIyIgw389cYYIRmWnT%2FK38qkQPmbocyfbcgT%2FfsRPvkBb2kB6u%2F7fv5mBi1Kfl35zUjhXhzQY6TUs0IBRa7wHo8wVOT2mts6T3d9fMMgPb1dTpWFjd3Fr512i9eFHD9Tm0dpF%2BA9qzPaNzAsjay0QLuf4Xo1Xb91olKHzA9QWLO96k8Kk2Vla%2FuOw1v8UfBrWBM6vA21OQ064j0%2FC872fYatskax0w4ybSIqH6HgKMkNqml6Y23ZayNn%2BgT%2BoqjtArg3iVKH7TwgTvBB0E15t7omjl6bA6%2Fb5p0soDsPpAbdh0CiZvAUmagRahuPPlFXfxzcdU1NcAeVo%2F3uA7J4PSnriG4i4c2quBcubWcT5AZGJEnT1D14YDjMRZAVdOT15DkBmQyIK%2B2huvgd0HBzcYTXWntI4iTE5wli6w8P2cUdDu88r%2F63f86pRSS3QJuaCGWD0YvNuAeLgJzXsOtHWYl3Z48pupbGL9xJZhVm75Rnk4bIlRScHsWugsh2pHRXlttTwUxHphpABwNOwDI2nS%2B2ENxJSuRndC9tjn5Oj4r4mvWPTD85NX7BTrqAUiD9A%2Fw06lPOm16u4Eo100Kb4CL47CI%2FTa28NBeD%2FUvfEh%2FsIaAhRUCoiWIxSWUcTuPhiTpmS5X1sSSvXbHjTQpHgpj%2FZVKfT94xl8Lctphc%2BYLzSFoDCjRikvQahhrsvGUBj4DF0AolzOONsli99ALC1cgUImbwb7XrcxvVp01zjhAWHYT4HVZRH1q6BocW0lmfA0y2jfduaJMQEeG5o7zaJBHFjF7N7L0yzavyiFwFz%2FDZalbddhuLyE75wv4B2r%2FCvGvE57ozuvonb3eYLthGolK0Km4KgbrHiWaDcOm4xty6JU8WKvokg%3D%3D&X-Amz-SignedHeaders=host&X-Amz-Signature=4ca5f99092ddd8b7f891098a60bc27e08adc2c4210b4c5fd0956bf8a5d1ef663
Operating profit fell by 60%. Reports previously suggested an asking price of $1bn, but TCAP are paying a good deal less. There does seem to be distress here, though not an imminent failure. Unfortunately I cannot find out how the other areas have performed, or any estimate how the virus has impacted. I think this is a pig in a poke, but hope TCAP are better informed than me! This seems a binary action: eithe TCAP will get dragged under, or it will, as you suggest, be a fantastic acquisition. The market, I think, is reacting to the uncertainty. My holding is small, so I will hold. I won't add until things are clearer here. Thanks again for your help.
and finally, andsoforth...
Why am I so confident.
Simply, I know the company well. I know a few of there senior people and I know the model.
It needs some work to re-kindle the excitement but it has:-
- The Block platform still by far the best there is globally imo
- It has a liquidity seeking dark algo that is growing in traded volumes and that is being rolled out globally
- It has a fixed income product (Veg-Chi) that is growing but still early in its adoption
- It delivers a client base to Icap and that delivers them huge opportunity
For me, they need someone like an Icap - brutal and focused as I feel Liquidnet lost it's way, but the market still needs a platform that delivers block sized execution.
To continue andsoforth,
I get Cannacord and their concern at trailing earnings but there is a lot more to a Liquidnet than just the revenue less costs imo.
Icap get a
- global client base across equities and fixed income (as that market continues to drive revenues)
- 1,000 plus signed agreements with the largest asset managers across the world
- a business model that scrapes order flow and thus has the ability take all orders that are not placed with third party brokers and also gets any order share balance not placed to a broker. That leads to a huge global liquidity pool
- A dark seeking also that is global and well respected
The key for Icap is how they can build on the new relationships they will have and cross sell their suite of products.
Couple that with drive 'block' trading and review the technology and the opportunity is clearly there.
Hi andsoforth,
My understanding is that there were four parties interested at different levels of commitment. These were names provided by people fairly close and I have no reason to doubt the names as they were logical acquirers.
There may still be a sexual harassment claim against the company, but for obvious reasons I decline to comment as I am aware but haven't followed too closely.
What I would add is that your comment "which is probably why the CEO moved sideways earlier this year" may have some element of truth, but only he could answer a question of that nature.
Finally, I feel this is a sale that feels like desperation for a Liquidnet which makes it a steal of a purchase for an Icap.
Hi Cheapshareboy,
Liquidnet has been around now since early 2001 - April launch in the US and then launched in Europe followed by Asia.
Started life as a block trading platform for equities live in 5 markets and quickly opening up in European markets.
Opened in Asia some years later and then Canada alongside the US equity markets.
Had huge success in it's formative years and was hit by the 2008 crash like everyone else.
Europe drove the way for broker access in a controlled fashion and then delivered a dark seeking also around 2011.
Last few years have seen a tail off in revenue growth but the block platform is still unique in execution size, size of liquidity pool (in excess of $100bn daily) and execution performance.
What it needs now is a fresh pair of eyes and to be re-ignited and it is a steal in my opinion.
If I had my way, I would review the various revenue streams and maybe pull back on some and also look to keep the best people.
It is an easy win in lowering costs and driving the high margin revenue streams.
OK, thanks, might be in this one for longer than I wanted given the drop , although I am aware if it goes up and I sell I still get the dividend.
You bought yesterday- means you get the dividend.
As long as you still held 8am this morning
Sorry for beginner question, but I bought ordinary shares yesterday, does that mean I will get the dividend?
Ta, Tam
Hi Roley
Liquidnet has been up for sale since the end of May and TCAP seem to be the only takers. All the supposed US bidders, and private equity, have declined to move. They seem to be doing a lot less business due the current crisis, and they have made a few marginal acquisitions over the last few years that have added nothing to the business. There is also an outstanding sexual harassment suit against the company, which is probably why the CEO moved sideways earlier this year.
TCAP quoted EBITDA in their RNS, which does not see conducive to confidence. The brokers are also unhappy:
"Cannacord Genuity downgraded their recommendation and target price for shares of broker dealer TP Icap after the firm disclosed that it was in "advanced discussions" to acquire non-listed Liquidnet Holdings.
According to the Canadian broker, the proposed purchase for $600-700m - including an upfront payment of $550m - valued the takeover target at 12 times' its trailing earnings before interest, taxes, depreciation and amortisation to June 2020.
Furthermore, given the absence of forecasts for Liquidnet, Canaccord plugged in its own assumptions and reached the conclusion that TP Icap's claim that the transaction would be neutral for earnings per share in year two was off.
For that to be true, they estimated that Liquidnet would need to nearly double its EBITDA.
Instead, Canaccord judged that the purchase would be 12% earnings dilutive, leading it to lower its earnings per share estimates for TP Icap for 2021 and 2022 to 33.9p and 34.4p, respectively.
Hence, analysts Justin Bates and Portia Patel downgraded their recommendation for the company's shares from 'buy' to 'hold' and slashed their target price from 401.0p to 275.0p."
Personally I cannot find a simple set of accounts for Liquidnet, so again I smell something.
Why are you so confident here? (I hold and am continuing to do so).
Roley - cannacord came out yesterday trashing ICap estimates for earnings from luquinet. They worked out their own earnings assumptions in the absence of actual forecasts being available. They said ICap assumptions are "wrong and over optimistic" - yet they haven't even got the figures. What's your take on the potential of this acquisition to be earnings accretive from year 3 onwards?
I am happy answering any questions you may have about Liquidnet as I know the ''Crossing' space well.
Fire away if you wish, but it is a great business and gives ICAP an amazing global asset management footprint they can only dream of having.
Been following this share for several weeks. Been meaning to buy at £3 range.
I have no clue on how to decipher this acquisition and how it'll affect company near/long term. I have no clue on how to decipher the divi statement. Clearly not smart enough.
It does seem oversold, but not sure if we'll get a "dead cat bounce" for it to level off at these prices.
The acquisition is excellent Cheapsharesboy.... Believe me.
And it is somewhat cheap given previous bids where the CEO turned all down.
Crazy opportunity.
The share price is bad but the acquisition is excellent.
I will stick for the long-term. The future yield will be 10%.
It's just if one can wait. I can.
Gla