Markit’s float at risk from EU’s collusion probe
INVESTORS in Markit fear the European Commission’s probe hanging over the market data firm could derail or delay its planned stock market flotation, City A.M. understands.
The group is 51 per cent owned by a consortium of hedge funds and investment banks, some of whom are looking to cut down or even completely sell off their stakes in Markit.
The data firm is reported to have filed for a initial public offering (IPO) in New York, aiming to raise $500m (£300m) in a 10 per cent float, under a new system which allows it to keep the details private at first.
Such a deal would value the group at $5bn or more.
But until the company and its financial backers have more certainty on the proposals, it is proving difficult to consider the right level for the price of the sale, and so to push ahead with the mooted initial public offering.
Market volatility is one hurdle – a flood of mergers and acquisitions, as well as flotations, are underway currently, but just a month ago some deals looked unlikely as energy market turmoil hit stock prices.
And the EC’s anti-trust investigation is also another potential sticking point.
The Commission launched its competition probe in 2011, looking at potential collusion between 16 banks and Markit in the credit default swaps (CDS) market.
The authorities worry that the system by which Markit obtains the data is very opaque, as the banks give it directly to the firm, and the figures are available from very few other providers.
In autumn 2013 European commissioner Joaquin Almunia said he was waiting for responses to his investigation from the banks and Markit before the investigation could draw its conclusions.
That probe is still continuing, but the timescale is a flexible one – the election of new commissioners this year could potentially accelerate the conclusions.
The maximum fine if Markit is found guilty of anti-competitive behaviour would be 10 per cent of its annual turnover. In 2012 its turnover was £530.3m, meaning any charge could come in at as much as £53.3m.
Markit, the banks, the hedge funds and the European Commission declined to comment.