The Canada Pension Plan Investment Board is planning to invest up to $450-million (U.S.) to take a major stake in an initial public offering of a Britain-based data company headed by Canadian finance executive Lance Uggla.
London-based Markit Inc., which provides financial data to companies working in the capital markets, filed details of its IPO with U.S. regulators Tuesday, revealing its plans to sell 45.7 million shares for between $23 and $25 each. Including a possible over allotment of additional shares depending on demand, the deal could be worth as much as $1.3-billion.
The prospectus says CPPIB, which manages $219-billion (Canadian) in assets for the Canada Pension Plan, has "indicated an interest" in purchasing up to $450-million (U.S.) in the IPO, or about one-third of the total offering at the maximum size of the deal. If the deal goes through, CPPIB would get a seat on the board of the newly public company.
CPPIB spokeswoman Linda Sims said the fund would not comment on Markit because the purchase is not a completed transaction. "As per the prospectus, this is an indication of interest only," she said in an e-mail.
At the maximum price in the range, the deal values Markit at $4.47-billion, including shares being retained by current investors that will not be sold in the IPO. If CPPIB takes a $450-million stake, it would own about 10 per cent of Markit after the IPO is completed.
Markit was founded in 2003 by a group of financial services executives, including Mr. Uggla, who is chairman and CEO of the company. He was previously global head of credit trading at TD Securities Inc. and, earlier in his career, worked at CIBC Wood Gundy.
The company was initially created to provide daily data on the opaque credit derivatives market, but expanded rapidly into a far wider range of financial data. It sells pricing and other data to banks, hedge funds, asset managers, exchanges and others, and also offers trade processing services and software tools to financial players. Markit earned an operating profit of $230-million last year on revenue of $948-million.
The company is currently owned by its senior executives and an array of financial institutions and private equity investors, but some have indicated they will sell their shares as part of the IPO offering.
Bank of America is expected to be the largest seller, trimming its stake from 8.1 per cent to 4.6 per cent after selling over seven million shares, while Citigroup Inc. said it will sell 5.1 million shares and Deutsche Bank will sell almost five million shares.
Esta Investments Pte Ltd., owned by Singapore state investment firm Temasek, will keep its 10.4 per cent stake acquired last year, while private equity group General Atlantic Partners Tango LP will retain an 11.4 per cent stake, leaving both companies as the largest shareholders after the IPO.