Bloomberg News

NYSE Euronext Takes Stake in Private-Placement Startup ACE (2)

September 09, 2013

NYSE Euronext (NYX:US), the owner of the New York Stock Exchange, bought a minority stake in ACE Group Inc., which operates a platform for companies to sell stocks, bonds and other securities privately.

ACE was founded in 2010 and runs a portal through which broker-dealers can post and manage securities sales, while investors can search for offerings, according to a joint statement posted on the startup’s website today. Financial details of NYSE’s purchase weren’t disclosed.

The move is the latest acquisition by a U.S. public exchange operator, as falling volume and increased trading in dark pools and similar venues shrink industry margins. In late August, Bats Global Markets and Direct Edge Holdings LLC said they would merge, and NYSE rival Nasdaq OMX Group Inc. has made several purchases this year. IntercontinentalExchange is in the process of completing its takeover of NYSE Euronext.

The deal to buy a stake in ACE was purely opportunistic, said Scott Cutler, head of global listings at NYSE, in a phone call.

“We’ve spent a lot of time looking at opportunities in the private market,” he said. “We’re making an investment in this platform.”

ACE usually works with broker-dealers to sell private company offerings of shares or debt to institutional investors, said Cutler. It focuses on companies looking to raise at least $5 million, according to NYSE. The investment will help ACE pay for a doubling of staff and development of other issuer services, including investor relations tools, the New York Times said in a report.

Shares of NYSE Euronext were up 0.6 percent at $42.13 as of 12:43 p.m. New York time.

Branching Out

In a statement, the companies said they will work together to establish technology for the platform to bring “greater transparency and efficiencies to the private market.”

August’s deal between Bats and Direct Edge will create the second-largest stock exchange operator in the U.S. In March, Nasdaq announced a joint venture with SharesPost Inc., an online marketplace for trading shares in closely held companies, where brokers can trade stocks of firms before any initial public offering. Nasdaq has also this year bought the Treasury bond-trading platform eSpeed, the shareholder-relations unit of Thomson Reuters Corp. and a stake in The Order Machine, a Dutch trading system focused on options.

ICE’s acquisition of NYSE is expected to be completed later this year. Chief Executive Jeffrey Sprecher has said he plans to spin off European stock exchanges owned by NYSE, while there has been speculation there will also be job cuts at the company.

To contact the reporters on this story: Eleni Himaras in Hong Kong at ehimaras@bloomberg.net; Sam Mamudi in New York at smamudi@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net; Nick Baker at nbaker7@bloomberg.net


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