Bats Investors Said to Explore $200 Million Private Placement

  • Shareholders may sell stakes to new, existing investors
  • Bats may file initial public offering as soon as next week

Investors in Bats Global Markets Inc. are considering raising about $200 million by selling shares in a private placement, as the stock-exchange operator prepares to go public early next year, according to people familiar with the matter.

The deal being considered would involve some of Bats’s shareholders selling part of their stakes in the company to new or existing investors, said the people, who asked not to be identified because the matter is not public. Bats’s private equity backers -- TA Associates Management LP and Spectrum Equity Investors LP -- have a right of first refusal on the placement and may choose to increase their holding, the people said.

Bats’s advisers have contacted potential investors such as Temasek Holdings Private Ltd., Singapore’s state investment company, to gauge their interest in the company, the people said. No final decision has been made and the structure and timing of any deal may change, they said.

Bats’s largest shareholder is KCG Holdings Inc., which owns about 17 percent and could be one of the sellers, the people said. Some of Bats’s more-than-a-dozen other investors may also sell shares in the private placement, which could happen before the end of the year, the people said.

Representatives for Bats and KCG declined to comment, while officials at TA Associates, Temasek and Spectrum didn’t immediately respond to requests for comment.

IPO Plans

Companies often sell shares in a private placement ahead of an IPO as a way to let some investors cash out while establishing benchmark pricing. High-frequency trading firm Virtu Financial Inc. sold a stake to Temasek Holdings ahead of its share sale earlier this year. Bats Chief Executive Chris Concannon was Virtu’s president and chief operating officer before joining Bats last year. 

The Lenexa, Kansas-based company could file an initial public offering valuing it at about $2 billion as soon as next week, with plans to begin selling shares as soon as April, the people said. The Wall Street Journal first reported Bats’s IPO plans last month.

Bats, formed 10 years ago as an alternative to the Nasdaq and New York Stock Exchanges, withdrew an IPO in 2012 due to technical glitches. It describes itself as the second largest equities market operator in the U.S., handling more than 1 billion to 1.5 billion trades daily. KCG Holdings, the Jersey City, New Jersey-based brokerage, is Bats’s largest shareholder. Other investors in Bats include Bank of America Corp. and Citigroup Inc., according to its website.

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