Bond broker Chapdelaine & Co. is seeking buyers as an April agreement to sell itself to Hong Kong-based Primus Financial Holdings Ltd. has yet to close, according to three people with direct knowledge of the matter.
Chapdelaine executives held a meeting this week with staff in New York to inform them the Primus deal was in jeopardy, according to the people, who declined to be identified because they aren’t authorized to speak publicly to the media. CRT Capital Group LLC, the broker-dealer backed by private-equity firm Aquiline Capital Partners LLC, is among firms considering a bid, the people said. The brokerage arm of Ken Griffin’s Citadel LLC was also named as a potential buyer at the meeting, two of the people said.
Private-equity firms are buying or backing broker-dealers in an attempt to profit over bank caution in using capital for trading and gaps left by the demise of Lehman Brothers Holdings Inc. and Bear Stearns Cos. Aquiline, run by Jeff Greenberg, invested $225 million in CRT last September. The capital infusion was intended for hiring and to boost the Stamford, Connecticut-based firm’s ability to handle larger trades.
“There are several opportunities in this market as the smaller firms without capital struggle to survive,” CRT Chief Executive Officer Ron Kripalani said in an e-mailed message. He declined to comment on Chapdelaine, citing corporate policy. “I suspect there will be considerable consolidation” in the first quarter of 2011, he said.
Richard Chapdelaine, the founder of the New York-based firm that bears his name, and CEO Geoffrey Coley didn’t return calls. Chapdelaine spokesman Joseph Anthony, didn’t return four telephone calls seeking comment. Devon Spurgeon, a spokeswoman for Citadel, declined to comment.
Primus founder Robert Morse, a former Asia investment banking chief for Citigroup Inc., said in an interview his transaction is a “live deal at this point.” He declined to comment further.
Primus, which focuses on acquiring financial services companies, agreed to buy 70 percent of the company in April, to help the fixed-income broker grow.
Rival firms are being contacted by Chapdelaine employees seeking jobs, according to executives from six brokerage companies. A team that traded structured debt at the firm left this month, including Dean Larson, Barry Dennis, Adam Robison and Bill Fedyna, according to Financial Industry Regulatory Authority records. The four declined to comment when reached by telephone.
CRT, which has more than 140 employees, has been trading debt securities and equities for clients since 1989. The firm has been hiring to bolster trading across its offerings, including equities and convertible bonds, in addition to building new units dedicated to U.S. Treasuries and mortgage and asset-backed securities.
A separate agreement Primus had with American International Group Inc. to buy a Taiwanese life-insurance unit from the U.S. insurer failed to go through four months ago. AIG had agreed to sell its almost 98 percent stake in Nan Shan Life Insurance Co. to Primus and China Strategic Holdings Ltd.
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