Rivals take on Goldman trading platform
By Ben White and James Politi in New York
Sun Jul 22, 5:10 PM ET
Merrill Lynch , Lehman Brothers, Morgan Stanley and Citigroup are among a group of investment banks developing an electronic trading platform for unregistered securities to compete with existing systems such as the one created by Goldman Sachs.
The move comes after Goldman signed up Oaktree Capital, the hedge fund group, and Apollo Management, the private equity firm, to sell unregistered shares through its GSTrUE private trading system. Apollo shares will also trade on a platform created by JPMorgan Chase.
The system being developed by the group of banks is intended to ensure that Goldman, JPMorgan or others do not come to dominate the electronic market for unregistered shares, people close to the matter said.
Such shares, known as 144A issues, are expected to become an increasingly popular way for alternative asset managers, such as hedge funds and private equity groups, to raise permanent capital without submitting to the public disclosure required when selling stock to the general public through an initial public offering.
IPOs must be registered with the Securities and Exchange Commission.
In some instances, such as with Apollo, the unregistered securities are expected to be one step along the way to a full IPO.
In addition to limited disclosure, unregistered shares offer a quicker way to raise capital. Going through the SEC registration process can take months,an especially sensitive issue if a group thinks demand for its shares might weaken over time.
Unregistered shares are available only to qualified investors such as large pension funds, hedge funds and high-net worth individuals.
The group of banks, including Merrill, Lehman, Morgan Stanley and Citi, is expected to launch the new platform in September. |
