Refco Group's recent IPO netted it over half a billion dollars. Although the firm, which was recently ranked the ninth largest FCM in the world by Commodity Futures Trading Commission, has stated that a large chunk of that cash has been earmarked for early debt repayment, there will remain a substantial amount to fuel the acquisitive broker's growth ambitions. FO Week's Jim Kharouf explored some of the options available to Refco.
In the wake of Refco's IPO windfall on 11 August, executives
and analysts said the FCM now has tremendous flexibility to
expand its business across a variety of fronts.
Refco raised $583m in its listing, which was immediately
followed by a first day price rise of 25%. Shares opened at $22
and closed up $5.48 at $27.48. By 17 August the price had
settled down to $27. The consensus amongst observers was that
the floatation was a major victory for Thomas H Lee Partners,
which took a 57% stake, along with several partners, in Refco
for $507m last year. Lee sold 7.7m of its 56.4m Refco shares in
the IPO for $159.5m in cash, trimming its holdings in the firm
to 38% from 49%.
Following the listing, the question on many market
participants' lips was what Refco planned to do with more than
half a billion dollars. In Securities and Exchange Commission
filings, Refco said it would use cash for working capital and
debt service, including the early repayment of $210m of bond
debt scheduled to mature in 2012, as well as looking for more
This article is available exclusively to subscribers
Please log in to continue reading.
Not yet a subscriber?
Click here to take a free trial.
Already have an account? |
Please fill in your details below and a customer service representative will contact you.