Shearman & Sterling is advising Temasek in connection with Virtu Financial, Inc.’s proposed acquisition of KCG Holdings, Inc. in a cash transaction valued at $20.00 per KCG share, or a total of approximately $1.4 billion.
The transaction will extend Virtu’s scaled operating model to KCG’s wholesale market-making businesses and broaden the distribution of Virtu’s technology and execution services to KCG’s extensive institutional client base. Virtu expects to migrate trading of the combined company onto a single, proven technology, risk management and analytics platform.
Virtu intends to fund the cash transaction and debt refinancing with new gross borrowings of $1.65 billion and the sale of $750 million of common stock, priced at $15.60 per share.
Temasek, an existing Virtu shareholder, has committed to invest $125 million in Virtu common stock. North Island, whose principals are Robert Greifeld and Glenn Hutchins, will invest $625 million in Virtu common stock, in partnership with GIC, Singapore's sovereign wealth fund, and Public Sector Pension Investment Board (PSP Investments), one of Canada's largest pension investment managers. The sale of shares is conditioned upon the closing of the transaction.
Virtu has also entered into a commitment with J.P. Morgan Securities LLC to provide up to $1.65 billion of debt financing for the transaction.
The deal is expected to close during the third quarter of 2017, subject to regulatory approvals.