• Bats shares valued at about a quarter of KCG’s market value
  • ‘Shareholders don’t own our stock for ownership of Bats’: CEO

KCG Holdings Inc. plans to start cashing in its Bats Global Markets Inc. shares, liquidating an investment worth about a quarter of the trading firm’s market capitalization.

“It’s a great investment,” KCG Chief Executive Officer Daniel Coleman said Monday at a Barclays Plc conference. “That said, our shareholders don’t own our stock for ownership of Bats.” The money raised will probably fund share repurchases, he said.

Bats, a stock-exchange operator based in Lenexa, Kansas, went public in April, but shareholders subject to a lock-up agreement can’t start selling until next month. Jersey City, New Jersey-based KCG owns more Bats equity than anyone else: 13.2 million shares that amount to a 14 percent stake, according to regulatory filings.

KCG’s stake was worth $321 million as of Monday, or 25 percent of its $1.27 billion market cap. The electronic market maker spent $393 million on buybacks in 2015.

Lock-up agreements prohibit shareholders from selling stock for a fixed period of time following an initial public offering. For Bats, there are three dates when shareholders can start trading: Oct. 12, 2016; April 10, 2017; and Oct. 7, 2017. KCG can sell a third of its stake at each milestone.

For KCG, this moment has been years in the making. Bats tried to go public in 2012, but a technical glitch on its exchange forced it to abandon the IPO. KCG was formed in 2013 when Getco, one of Bats’s earliest investors, bought beleaguered Knight Capital Group.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE