TH Lee Partners to recap futures trader

The Boston firm has agreed to buy a majority stake in Refco in a deal valuing the futures brokerage house at $2.25bn.

Thomas H. Lee Partners has announced it will recapitalise retail futures brokerage firm Refco in a transaction that values the company at $2.25 billion (€1.86 billion).

Terms of the deal were not disclosed in the announcement.

The Boston-based private equity group will acquire a majority stake in Refco while the broker’s management team, led by chief executive officer Phillip Bennett, will retain a significant ownership interest in the company.

Refco, based in New York, is one of the largest global execution and clearing firms for derivatives with about $20 billion in assets. It also provides brokerage services in the fixed income and foreign exchange markets. Over the past few years, the company has built up its platform with the purchases of futures commission merchants, such as Lind-Waldock and MacFutures, and is considered one of the largest retail futures firms in the country.

TH Lee Partners currently manages about $14 billion in capital and acquires significant ownership stakes in growth companies. The Refco acquisition would be its first investment into the futures sector. In November, TH Lee Partners participated in another mega-deal when it teamed with Edgar Bronfman, Jr., Lexa Partners, Bain Capital and Providence Equity Partners to purchase Time Warner’s Warner Music Group for $2.6 billion in cash.