January 6, 2014 8:30 pm

ICE looks to sell part of Euronext ahead of IPO

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IntercontinentalExchange is looking to sell at least a quarter of Euronext, the European stock exchange group, ahead of an initial public offering that is expected this year, according to people familiar with the situation.

A sale would allow the US derivatives exchange group a way to circumvent regulatory requirements that it hold a long-term stake in Euronext, which operates the main stock exchanges in Paris, Amsterdam, Lisbon and Madrid.

Bankers are preparing to approach European-based funds and banks in the coming weeks about purchasing a stake in Euronext, two people said. ICE and Euronext declined to comment.

Atlanta-based ICE secured regulatory approval for its $11bn purchase of NYSE Euronext, which closed in November, in part by assuring European authorities that it would hold a stake of at least 25 per cent for more than three years after a float of Euronext.

ICE will be freed of the obligation if it can find other long-term investors prepared to hold the stake long after the Euronext float, due to take place over the summer.

The company became the world’s second-largest exchanges operator by market capitalisation after the NYSE transaction closed and has long earmarked the remaining parts of Euronext for a sale or listing.

ICE’s interest in NYSE Euronext was primarily to gain access into the European derivatives markets as it had never owned an equities business.

While it is keeping the New York Stock Exchange, ICE plans to float the European operations once it has completed the integration of Liffe, the London-based derivatives exchange, in the first half of this year.

Jeff Sprecher, ICE chief executive, has held extensive talks with bankers and stakeholders in recent months about Euronext.

“We’ve agreed with regulators that the new shareholder base should include stable long-term shareholders that will consider the long-term interest of the new Euronext and its markets and this could also include ICE remaining as a continuing shareholder in a reduced capacity for a period of time,” he told investors in November.

Besides the share trading business, Euronext encompasses options, equity indices, single-stock futures and physical commodities such as sugar trading. ICE said Euronext had trailing 12-month revenues of more than $500m with operating margins of 33 per cent to 35 per cent.

News of the potential stake sale was first reported by Bloomberg.

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