Markit eyes $2bn from US offering

Markit is aiming to raise up to $2bn from a US listing, according to people involved in the process, as it seeks to challenge larger global rivals Bloomberg and Thomson Reuters in the fast-changing market for complex financial markets data.

Markit has appointed 14 banks as bookrunners on its initial public offering, which could take place later in the second quarter and give Markit a valuation well in excess of the $5bn level it reached last year.

The large banks on the IPO are all customers and stakeholders in Markit, which offers pricing, valuation and risk data for often opaque financial markets from fixed income and over-the-counter derivatives markets.

The company’s decision to divvy up roles on the preparation for the long-awaited listing has raised concerns that the deal may become excessively complex to administer as most IPOs of this size usually rely on a handful of lead bookrunners. A consortium of banks including Goldman Sachs, JPMorgan Chase, Citigroup, UBS and Deutsche Bank own 51 per cent of the company, with nearly all of them expected to have a role.

The UK company on Monday unveiled the filing made confidentially with US regulators earlier this year. The listing will not involve issuing new shares, but will instead see current investors, including management and employees, reduce their stakes.

The banks have been split into groups of two, with each assigned a Premier League football team name and given small tasks, people familiar with the process said. Markit wanted each bank to feel it had an important role and has told them there is a “fractional difference” in the fees they will receive, some of these people said. Markit declined to comment.

Markit has also used the IPO process as a way to get banks to pay attention to some of its new products, including those designed to compete with Thomson Reuters and Bloomberg. “This has been an extremely co-ordinated effort on their part to make sure their products are receiving the appropriate attention,” said one person close to the matter.

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The importance of place

June 2013: Why London was the right location for Canada’s Lance Uggla to launch Markit.

An investor roadshow could begin in three weeks. A listing of up to $2bn far surpasses earlier expectations that the company would seek to raise between $500m and $1bn from an IPO.

The company is also likely to seek a valuation that far surpasses $5bn, which was the level it reached after Singapore’s wealth fund Temasek took a stake last May.

General Atlantic, a US private equity fund, owns about 10 per cent of the company. The remainder is controlled by employees led by founder and chief executive Lance Uggla.

The acquisition-hungry company, which has done 25 deals since its inception, reported an increase in revenues for 2013 even though it only did a couple of small deals. Annual turnover rose 10.1 per cent to $948m, driven in part by its loans processing business. Pre-tax profits rose from $196m to $211m.

Investors will in time have to determine whether to value the group as a growth stock or on the basis of its steady recurring revenue business, which accounts for half its turnover. The group said it did not plan to pay a dividend.