PE firms consolidate stakes in US exchanges

Blackstone and Battery Ventures have made a bid for the New York Mercantile Exchange, while General Atlantic looks set to gain a foothold in the NYSE.

The Blackstone Group has teamed up with Boston venture capital firm Battery Ventures to bid for a stake in the New York Mercantile Exchange (NYMEX), the world’s largest energy futures exchange, according to Dow Jones.
 

Last year NYMEX rejected an offer from Boston-based Parthenon Capital after four months’ consideration.

The offer proposes splitting NYMEX’s equity from its trading rights, and gives the exchange a total value of $1.945 billion (€1.5 billion).

The private equity firms have offered a total deal value of $278.8 million, consisting of $185 million for a 20 percent equity stake and $1.25 million each for the trading rights of 75 of NYMEX’s 816 seats.
 
The firms’ stake would take the form of a preferred security convertible into equity. Each firm would also receive one seat on an 11-member board, cut from a current membership of 24, and would work to guide the exchange towards an IPO.
 
Blackstone and Battery teamed up five years ago to buy a third of LIFFE, the London International Financial Futures and Options Exchange, for $91 million. They tripled their money when Euronext acquired the exchange the following year.
 
Last year NYMEX rejected an offer from Boston-based Parthenon Capital after four months’ consideration.
 
In other news, the Wall Street Journal reports that the New York Stock Exchange (NYSE) plans to merge with Archipelago Holdings, the electronic-trading firm in which Greenwich, Connecticut-based General Atlantic Partners owns a 22 percent stake.
 
The current owners of the exchange will retain a 70 percent stake in the new company, NYSE Group. Archipelago will hold the remainder.
 
General Atlantic, in whose office the deal was reportedly negotiated, will retain a 6 percent position in the new group.