Megadeal boost for London as LSE sells Borsa Italia and TP ICAP buys Liquidnet

Two huge City deals went through today
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TWO huge City deals went through today, paving the way for the creation of new technology platforms that will transform trading and cement London’s position as a giant in world equity dealing.

First, the London Stock Exchange secured its sale of the Italian stock market to rival Euronext.

That deal gets it nearly £4 billion and a green light to pursue its transformational $27 billion merger with mega data business Refinitiv.

That will create a fintech trading platform without rival, say analysts.

Second, TP ICAP bought “dark pool” trader Liquidnet for $700 million. That makes founder Seth Merrin an even richer man since he owns half the equity, and creates a new trading powerhouse.

TP ICAP was built by Michael, now Lord, Spencer the billionaire City grandee.

It specialises in bond and interest rate trades but with this deal expands into equities via the acquisition of what is regarded as one of the cleverest tech platforms around.

Spencer told the Standard: “These two deals remind us that the City is the global leader in financial trading.”

“Dark pool” trading allows investors to trade large blocks of shares away from the glare of an exchange where prices can quickly move against them.

While some have seen these pools are controversial, they are increasingly popular for very large trades since they provide liquidity and save costs.

TP ICAP immediately gains 1000 new institutional clients in what CEO Nicolas Breteau called a “rare” chance to grow revenues. TP ICAP is moving to new offices in Bishopsgate, just near Liquidnet’s present office.

Job cuts will be minimal. “It’s about revenue in, not cost out,” said one source.

The LSE’s sale of Milan’s Borsa Italiana should satisfy the European Commission concerns about the Refinitiv merger.

CEO David Schwimmer said: “We believe (this) will contribute significantly to addressing the EU’s competition concerns. We are pleased to have reached this important milestone.”

For Euronext, the acquisition of Borsa Italiana adds to its exchanges in Paris, Amsterdam and Dublin among others. Euronext chief executive Stephane Boujnah called the deal “a turning point in our group’s history”.

Both deals are good for the City banking advisers who will pocket tasty fees. On the LSE deal that includes Barclays, Goldman Sachs and Morgan Stanley.

TP ICAP were advised by Bank of America, HSBC and Peel Hunt.

The London broker will launch a $425 million rights issue and cut its dividend to fund the Liquidnet purchase.

Merrin, a Wall Street trading legend, stood down as Liquidnet CEO in February. He has been caught up in harassment allegations filed by an employee. He is defending the lawsuit.