TP ICAP Launches Rights Issue For Liquidnet Acquisition

Deutsche Borse-LSE Merger in Focus

On 9 October 2020, TP ICAP plc (“TP ICAP” or the “Company” and together with its subsidiaries, the “Group”) announced the proposed acquisition of the entire issued share capital of Liquidnet Holdings, Inc. (“Liquidnet” and, together with its subsidiaries and the Group, the “Enlarged Group”) for a total consideration of between US$575 million and US$700 million, comprising cash consideration of US$525 million (to be primarily financed via a rights issue which was fully underwritten on a standby basis by HSBC Bank plc (“HSBC”) from the date of that announcement) (subject to customary adjustments) payable on completion of the Acquisition (“Completion”), non-contingent deferred consideration of US$50 million and contingent consideration of up to US$125 million (the “Acquisition”).

The Acquisition creates a UK-headquartered, global financial markets infrastructure provider. The Enlarged Group will be well-positioned to benefit from powerful market structure trends related to buyside objectives, such as achieving trade process efficiency and best execution, which are propelling the rapid electronification of financial market trading across multiple asset classes and, in particular, in the dealer-to-client segments of the Credit and Rates markets.

Today, TP ICAP announces a fully underwritten rights issue, which is intended to raise proceeds of approximately £315 million (approximately US$427 million1), to be used to fund the Acquisition (the “Rights Issue”).

The Rights Issue is expected to result in the issue of 225,334,552 new ordinary shares (representing approximately 40.0 per cent. of the existing issued share capital of TP ICAP and 28.6 per cent. of the enlarged issued share capital immediately following completion of the Rights Issue) (the “New Ordinary Shares”). The Rights Issue will be on the following basis:

2 for 5 Rights Issue at 140.0 pence per New Ordinary Share.

The Acquisition is conditional on the approval of the shareholders of the Company (the “Shareholders”) at a general meeting of the Company which is to be held on 1 February 2021 (the “General Meeting”) and completion of the Redomiciliation (as defined below).  A notice of the General Meeting will be released with the circular in connection with the Acquisition (the “Circular”) and prospectus in connection with the Rights Issue (the “Prospectus”), which are expected to be published today, subject to approval by the Financial Conduct Authority (the “FCA”). Capitalised terms used but not defined herein have the meanings assigned to them in the Prospectus.  The directors of TP ICAP (the “Directors”) unanimously consider that the resolution to approve the Acquisition (the “Resolution”) is in the best interests of TP ICAP and its Shareholders and recommend that Shareholders vote in favour of the resolution.

Details of the Rights Issue

Pursuant to the Rights Issue, the Company is proposing to offer 225,334,552 New Ordinary Shares by way of a Rights Issue to Qualifying Shareholders (other than to shareholders with a registered address or who are resident or located in one of the Excluded Territories, subject to very limited exceptions). The offer is to be made at 140.0 pence per New Ordinary Share (the “Rights Issue Price”), payable in full on acceptance by no later than 11.00 a.m. on 16 February 2021. It is expected that Admission will occur and that dealings in the New Ordinary Shares (nil paid) on the London Stock Exchange will commence at 8.00 a.m. on 2 February 2021, the trading day after the General Meeting.

The Rights Issue is expected to raise proceeds of approximately £315 million (approximately US$427 million). The Rights Issue Price represents a discount of approximately 35.2 per cent. to the theoretical ex-rights price based on the closing middle-market price of 246.6 pence per existing share on 6 January 2021 (being the latest business day before the announcement of the terms of the Rights Issue).

The New Ordinary Shares, when issued and fully paid, will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive dividends or distributions made, paid or declared with a record date after the date of the issue of the New Ordinary Shares.  Applications will be made to the FCA and to the London Stock Exchange for the New Ordinary Shares to be admitted to the Official List and to trading on the London Stock Exchange.

Through the issue of the New Ordinary Shares, the Company expects to raise gross proceeds of approximately £315 million (approximately US$427 million). The aggregate expenses of, or incidental to, the Rights Issue to be borne by the Company are estimated to be approximately £12.5 million, which the Company intends to pay with existing resources.

Commenting on the launch of the rights issue, Nicolas Breteau, CEO of TP ICAP, said:

“I am delighted to announce this next planned step in our process to acquire Liquidnet. This acquisition is a unique opportunity to transform TP ICAP’s growth prospects by materially accelerating our stated strategy of electronification, aggregation and diversification. We believe our two businesses are highly complementary and the deal, when completed, will help us to drive growth and shareholder value in the medium to long term.”

Trading update for TP ICAP and Liquidnet for the financial year end 31 December 2020

TP ICAP Trading update

TP ICAP provided a Q3 2020 trading update on 9 November 2020. As stated, revenue for the first nine months of 2020 was 1% lower on a constant currency basis and 2% lower on a reported basis, compared with the first nine months of 2019. While trading volumes continued to be subdued during much of Q4 2020, we expect revenue for the full year 2020 to be 1% lower than the prior year. This demonstrates the resilience of the TP ICAP franchise and the benefit of our diversification strategy, as revenue growth achieved in our Data & Analytics, Institutional Services and Energy & Commodities divisions offset much of the decline in revenue in our Global Broking division in 2020 after a strong first quarter.

Liquidnet Trading update

For the financial year ending 31 December 2020, Liquidnet has proved resilient in the midst of the COVID-19 pandemic and is expected to produce strong revenue performance compared with the twelve month period ending 31 December 2019.

Source: TP ICAP

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