Bats Global Markets Inc. gained two new owners after Lehman Brothers Holdings Inc.’s estate exited its investment in the operator of U.S. and European exchanges.
Private-equity firms Spectrum Equity Investors LP and TA Associates Management LP bought all of Lehman’s stake, according to a statement from Bats and the investors. Lehman had been the second-largest Bats owner. Financial terms weren’t disclosed.
Founded in 2005 by high-frequency traders, Lenexa, Kansas-based Bats operates two stock exchanges and an options market in the U.S. as well as Bats Chi-X Europe, the largest pan-European stock exchange. Bats accounted for more than 10 percent of average daily U.S. stock trading this year, according to data compiled by Bloomberg.
“They have really benefited from building a de novo technology platform,” Chris Mitchell, managing director at Spectrum Equity who will take a seat on the Bats board following the deal, said in a phone interview. “We clearly view the platform as the most scalable in the industry.”
Bats started trading in January 2006, aiming to match the incumbent exchanges on speed and beat them on prices. Seven years later, the firm’s daily average U.S. equity market share of 10.6 percent compares with 2013 averages of 22.6 percent at NYSE Euronext and 18.6 percent at Nasdaq OMX Group Inc.
Lehman, whose 2008 bankruptcy intensified the global financial crisis, had planned to sell more Bats shares than any other owner in the exchange operator’s aborted 2012 initial public offering. Documents from the IPO showed Lehman wanted to cut its voting power to 7.7 percent from 12.3 percent. The latter figure made it the second-biggest Bats owner.
The same regulatory filings showed Getco LLC, which this year merged with Knight Capital Group Inc. to form KCG Holdings Inc., was the largest owner with a 15.4 percent voting interest. Other Bats owners include Morgan Stanley, Credit Suisse Group AG, Nomura Holdings Inc., Citigroup Inc. and Bats co-founder Dave Cummings, according to last year’s IPO documents.
Bats canceled its IPO in March 2012. The company’s owners, who between them have invested $160 million, received $400 million in dividends during the second half of last year, according to Randy Williams, a Bats spokesman. He said Bats has no plans for another IPO.
TA Associates’s other investments include RGM Advisors LLC, a quantitative trading firm. Spectrum Equity’s software, Internet and media investments include online food ordering company Seamless and RiskMetrics Group Inc., the developer of risk-management products that MSCI Inc. bought in 2010.
Rosenblatt Securities Inc. advised the private-equity firms on the transaction, according to the statement from Bats.