BGC Partners plans to float its Newmark Grubb Knight Frank real estate broking unit, allowing it to focus on battling UK rival TP ICAP as the dominant interdealer broker in global financial markets.
The New York-based group said on Thursday it had confidentially submitted a draft S-1 statement to the Securities and Exchange Commission to float Newmark, which it has bulked up via a string of acquisitions since 2010.
“The number of Class A shares to be offered and the price range for the proposed offering have not yet been determined,” it added.
The Newmark unit accounts for nearly 45 per cent of the group’s total revenues but its profit margins are narrower and its price/earnings ratio is more lowly valued than other parts of BGC’s business.
It will leave BGC to focus on the brokers who trade over-the-counter derivatives such as interest rates, credit, energy and equities by phone, as well as building its electronic infrastructure business. The latter includes Fenics, a risk analytics business, and an emerging technology division.
At the start of the year, BGC lost its crown as the world’s largest interdealer broker to the enlarged TP ICAP business. Like its rival, it is doubling down on a gamble that humans will still be a vital part of the over-the-counter markets, which has been upended in recent years by a combination of regulation, increasing use of technology and low interest rates, which have damped market volatility.