Travel Food Company Seeks to Raise $849 Million in London I.P.O.

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BrokerDealer.com/blog update courtesy of extracts from today’s NYT DealBook.

LONDON – The SSP Group, an operator of food and beverage locations at airports and train stations, said on Tuesday that it planned to raise as much as $849 million in an initial public offering in London.

SSP, formerly known as Select Service Partner, is the latest company backed by private equity to plan an I.P.O. amid a rush of offerings in London, with more than $9 billion raised so far this year, according to Thomson Reuters.

The company, whose brands include Caffè Ritazza and Upper Crust, was acquired by the Swedish private equity firm EQT Partners in 2006.

“An I.P.O. is the appropriate next step for a business of SSP’s caliber, size and international scale and we believe that we are well-placed for life as a listed company,” Kate Swann, the SSP chief executive and the former top executive at the retailer WH Smith.

SSP plans to raise about 500 million pounds, or about $849 million, in the I.P.O. and will use the proceeds to reduce its debt.

EQT, the company’s management and other investors will also have an opportunity to sell shares in the offering, which will be made to institutional investors.

SSP, which is based in London, was formed in 1961 as SAS Catering, a division of the airline group SAS.

The company operates 1,981 food and beverage outlets in airports, railway stations and other travel locations in 29 countries in Europe, North America, Asia and the Middle East and employs about 30,000 people worldwide. The company also operates an onboard catering service, Rail Gourmet.

The full article can be found at NYT DealBook.

Ecuador, Kenya Government Bonds Entice Yield Hunters; Bankers & BrokerDealers Note the Deal Attracted $8 Billion in Bids

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Ecuador, banished from international capital markets since bailing on obligations in 2008 and 2009, sold $2 billion of bonds today after rebuilding its credibility with investors.

The nation issued the 10-year dollar-denominated securities to yield 7.95 percent, according to data compiled by Bloomberg. Credit Suisse Group AG and Citigroup Inc. managed the offering.

A month ago, hedge fund Greylock Capital Management LLC said Ecuador agreed to buy back about 80 percent of remaining defaulted debt from 2008 and 2009 to help pave the way for its bond sale. Retiring the securities would help protect a new bond sale from any possible legal wrangling stemming from the default, according to Moody’s Investors Service.

The Ecuadro deal came on the heels of Kenya’s first-ever international-bond sale, which attracted $8 billion worth of orders for two chunks of bonds totaling $2 billion. The Kenya deal was the largest-ever debt sale by an African country.

Noted the WSJ, “Frontier stocks and bonds have logged better performance than their emerging-market counterparts in recent months, and have attracted increasing amounts of cash from investors. As well, Cyprus is gearing up for its first public bond sale since receiving a bailout a year ago.”

 

Markit Heads to IPO Market, Wall Street BrokerDealers All Smiles

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wsj logoBelow BrokerDealer.com blog news extract courtesy of the Wall St. Journal.

One of the biggest financial service industry IPOs of the season (as well as any other industry initial public offering of the season) is scheduled to launch on Thursday, and, as noted by the WSJ, Wall Street’s biggest banks are in line for a payday of up to a billion dollars from Markit Ltd.’s share float, as they cash out part of their stakes in the financial-data firm and divvy up the underwriting fees.

The 12 financial institutions that rank among the London company’s top shareholders expect to raise as much as $1.02 billion selling shares Wednesday at as much as $25 apiece, a rare bit of good news at a time of sluggish revenue, soft trading activity and regulatory scrutiny. The largest sellers are expected to be Bank of America Corp. BAC 0.00% , Citigroup Inc. C +0.29% and Deutsche Bank AG DBK.XE +0.49% , with Bank of America selling seven million shares to raise up to $176 million, according to filings.

The firm’s largest holders—an employee-benefits trust, private-equity firm General Atlantic and Singapore state-owned investment company Temasek Holdings Pte Ltd.—aren’t selling their shares, according to regulatory filings. The Canada Pension Plan Investment Board is considering buying $450 million worth of the shares, the filings said.

The offering, which begins trading Thursday, could give the financial-information company a $4.5 billion market value, highlighting Markit’s evolution in the years since the financial crisis and investors’ thirst for data on derivatives, bonds, loans and foreign-exchange markets.

“Markit started with a great idea, which was to create a central pricing service in what were at the time very rapidly growing credit markets,” said Mark Beeston, a former board member and founder of financial-technology venture-capital firm Illuminate Financial Management.

At the same time, the banks that have backed Markit since its founding more than a decade ago have been jockeying for position in selling the offering to the public. The deal is expected to raise as much as $1.1 billion altogether.

The company and the banks are discussing a fee pool of about 4% on the IPO, which would amount to as much as $45 million if the deal is priced at the top of the range, people familiar with the matter said.

The banks skirmished over their roles as the IPO was in its planning stages, according to some of the people familiar with the matter.

For the full story, please click here to visit the WSJ.

Bankers Open Vault for Hotel Deals:BrokerDealer.com Blog

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wsj logoBrokerDealer.com provides news extract below courtesy of the Wall St. Journal

Banks are checking back into the hotel business.

J.P. Morgan Chase JPM +0.63% & Co., Deutsche Bank AG and other firms are ramping up lending for lodging acquisitions and debt refinancing to levels not seen since before the financial crisis. Lenders made $31 billion in hotel loans last year, nearly double the 2012 level, according to the Mortgage Bankers Association, while all commercial-property lending rose 47%.

wsj loansCredit is flowing against a backdrop of rising room rates, limited new construction and a spike in leisure and business travel in big cities such as New York and Los Angeles. Net operating income increased by 10% for the average U.S. hotel in 2013, according to PKF Consulting USA, which predicts “double digit annual gains” through 2015.

The easy money means hotel companies and investors can use less of their own cash to make deals, potentially amplifying returns. Debt now accounts for more than 67% of a hotel purchase price, up from about 56% in 2010, says PKF. That level is just below the high of around 70% in 2005.

Some of the largest hotel transactions have relied even more heavily on debt. NorthStar Realty Finance and a partner this month borrowed about $840 million from J.P. Morgan to acquire a 47-hotel portfolio for about $1 billion.

“There’s been a sea-change during the past two months,” says Monty Bennett, chief executive officer of Ashford Hospitality Trust, AHT +0.47% a Dallas-based hotel investor. “It’s pretty close to the 2007 lending environment again.”

The full WSJ article can be accessed by clicking here.

Trader Who Called Markets ‘Rigged’ Tempers His Critique

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BrokerDealer.com/blog update courtesy of extracts from today’s NYT DealBook

WASHINGTON – Bradley Katsuyama, chief executive of the stock trading upstart IEX Group, made waves on Wall Street by playing the part of a disruptive innovator who said he believed the markets were “rigged.”

But he adopted a softer tone on Tuesday in testimony prepared fora hearing before the Senate Permanent Subcommittee on Investigations. Mr. Katsuyama, who rocketed to prominence afterbeing featured in Michael Lewis’s recent book “Flash Boys,” voiced more measured criticisms of the market and defended the regulatory status quo.

Bradley Katsuyama, chief of IEX Group, at a Senate hearing on high-speed trading. (Doug Mills/The New York Times)

“We want to emphasize the point that IEX was created within the current regulatory framework, which shows that the spirit of the rules governing our market allow for different types of solutions to emerge if participants are properly incentivized to create them,” Mr. Katsuyama said in the prepared remarks.

The testimony showed a different side of Mr. Katsuyama, who had accompanied Mr. Lewis on a media tour surrounding the publication of “Flash Boys” in March.

In one appearance on CNBC, Mr. Katsuyama addressed the president of the BATS Global Markets exchange company, William O’Brien, and said: “I believe the markets are rigged. I also think you’re part of the rigging.”

With the book tour over, Mr. Katsuyama is trying to gain legitimacy for IEX by registering it as a full-fledged exchange. On Monday, IEX said it had hired John Ramsay, a former acting head of the trading and markets division of the Securities and Exchange Commission, to oversee regulatory compliance.

The Senate hearing on Tuesday, examining possible conflicts of interest in the stock market, will provide an opportunity for Mr. Katsuyama and other financial executives to recommend new policies while simultaneously promoting their business models. They will be subjected to questioning by the members of the Senate panel, which is led by Senator Carl Levin, Democrat of Michigan.

A major focus of the hearing will be the payments that brokerage firms receive for routing customer orders to particular exchanges or trading firms. The Senate panel contends that these payment systems can compromise brokerage firms’ obligation to execute customer orders on the best possible terms.

But not all the witnesses see it that way. Joseph P. Ratterman, the chief executive of BATS, acknowledged in his prepared remarks for the panel that payments for stock orders “create the potential for conflicts of interest,” but he added: “I believe these potential conflicts of interest can be and generally are managed by vigorous oversight within broker-dealers.”

He addressed a payment system known as the “maker-taker” model, in which brokerage firms accept rebates from exchanges in return for routing orders there. The Senate panel has singled out such rebates for scrutiny, warning of possible conflicts. But Mr. Ratterman said the rebates could improve liquidity and prices for investors.

“I believe restricting incentives to provide liquidity could be counterproductive,” he said in his prepared remarks. “Whether it is banning the current maker-taker fee structure, limiting payment for order flow generally, or other attempts to alter the economics of trading, price controls are a blunt instrument likely to cause disruptions and consequences that are unforeseeable and potentially detrimental to all types of investors.”

The full article can be found at NYT DealBook.