Bats IPO Could Value Exchange Operator at $1.8 Billion

  • Markets operator will sell shares for $17 to $19 apiece
  • Bats to list its own stock four years after first IPO flopped

Bats Global Markets Inc. says its initial public offering may value the second-largest U.S. stock exchange operator at as much as $1.8 billion, more than double the valuation in its failed IPO attempt four years ago.

Bats will sell 11.2 million shares for $17 to $19 each, according to an updated filing on Monday. Based on the company’s 95.7 million shares outstanding, the entire company would be worth $1.6 billion to $1.8 billion. The aborted 2012 listing gave Bats a value of about $760 million.

The company begins its roadshow for the offering as soon as this week, according to a person familiar with the plans. Although it’s already April, Bats would be one of the first U.S. IPOs of 2016. Stock-market volatility and investor unease reduced the number of companies willing to list their shares in the first quarter.

The Lenexa, Kansas-based securities market withdrew a previous listing because an error in its trading software stopped its shares from opening properly. The company has expanded since then by moving into markets including foreign exchange and options. It has become the biggest pan-European stock exchange. And it now lists exchange-traded funds.

The IPO could raise as much as $212.8 million. A $1.8 billion valuation would make the exchange operator the 17th biggest globally by market capitalization, according to data compiled by Bloomberg. Bats’s stockholders have the option to sell another 1.68 million shares, which would increase the size of the sale to 12.88 million shares, according to the filing.

Bats was formed more than 10 years ago by a consortium of financial institutions to rival the New York Stock Exchange and Nasdaq Stock Market in technology, speed and pricing. It is the biggest U.S. stock-exchange operator behind NYSE. Its owners include JPMorgan Chase & Co., Goldman Sachs Group Inc., KCG Holdings Inc. and Citadel LLC.

The company’s listing would be Bats’s first, potentially opening up a new line of business for the exchange operator and giving it an opportunity to compete with NYSE and Nasdaq.

The company has a heritage of cutting-edge technology. The time it takes for Bats to process an order message has decreased 94 percent to 57 microseconds from more than 930 microseconds in January 2007. It has 286 employees globally.

Morgan Stanley and Citigroup Inc. are the lead underwriters.

(A previous version of this story was corrected to change the highest potential value of Bats to $1.8 billion.)

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