Wednesday, April 05, 2006

IDD on TA's latest hedge fund play

IDD had a nice piece describing private equity firm TA Associates acquisition of electronic securities lending firm eSecLending from U.K. insurer Old Mutual.

"ESecLending, a seven-year-old company, conducts electronic auctions for prime brokers, in which the winner gains the exclusive rights to borrow from portfolios of stock owned by large institutional investors. Hedge funds need to borrow stock to facilitate short selling. Getting access to these portfolios-and especially to hard-to-borrow "hot stocks"-is a crucial service that prime brokers provide to their hedge fund clients, and an important differentiator among them. "ESecLending has injected a greater degree of transparency and fairness into this formerly opaque market," said Wheeler. "It's yet another indication that there is always room for innovation and independence in the financial services world."

Among TA's other recent buys are GlobeOp, a leader in hedge fund administration, and Creditex, an electronic execution and settlement platform for the hedge fund-dominated credit derivatives market. It has also made investments in such financial technology companies as Ion Trading Group, which specializes in fixed-income trading software; OpenLink Financial, which produces software for energy trading; Clayton Holdings, which offers software for the mortgage- backed securities market; Quantitative Analytics, a provider of "rocket-science" modeling and analysis software for hedge funds and proprietary trading desks; and Lava Trading, a trading software company that TA sold to Citicorp in 2004.

See teh full article below.



TA Comes at Hedgies From Different Angle: Purchase of eSecLending is latest in a string of acquisitions of hedge fund infrastructure providers
Janet Lewis (janet.lewis@sourcemedia.com). The Investment Dealers' Digest : IDD. New York: Apr 3, 2006. pg. 1
Full Text (494 words)
Copyright Thomson Media Apr 3, 2006

TA Associates' acquisition last week of electronic securities finance platform eSecLending from UK fund manager Old Mutual is one of a series of investments the private equity firm has made in an effort to cash in on the hedge fund boom. The firm has, in effect, taken an indirect approach to the much-hyped "convergence" of private equity and hedge funds by going after the infrastructure that serves the hedge fund community.

"TA has a terrific track record in this sector," said Jane Wheeler, who heads the financial services practice at Evercore, which advised TA (Putnam Lovell Securities advised Old Mutual). The deal, for an undisclosed sum, was another feather in its cap for Evercore, a high-end boutique investment bank and private equity firm, which is expected to go public shortly. Wheeler joined Evercore last year from Morgan Stanley, where she was a senior FIG banker, bringing with her a string of clients, including TA, which has $10 billion under management and just closed a new $3.5 billion fund. In November, TA took public the Intercontinental Exchange (ICE), an electronic commodities exchange.

Among TA's other recent buys are GlobeOp, a leader in hedge fund administration, and Creditex, an electronic execution and settlement platform for the hedge fund-dominated credit derivatives market. It has also made investments in such financial technology companies as Ion Trading Group, which specializes in fixed-income trading software; OpenLink Financial, which produces software for energy trading; Clayton Holdings, which offers software for the mortgage- backed securities market; Quantitative Analytics, a provider of "rocket-science" modeling and analysis software for hedge funds and proprietary trading desks; and Lava Trading, a trading software company that TA sold to Citicorp in 2004.

ESecLending, a seven-year-old company, conducts electronic auctions for prime brokers, in which the winner gains the exclusive rights to borrow from portfolios of stock owned by large institutional investors. Hedge funds need to borrow stock to facilitate short selling. Getting access to these portfolios-and especially to hard-to-borrow "hot stocks"-is a crucial service that prime brokers provide to their hedge fund clients, and an important differentiator among them. "ESecLending has injected a greater degree of transparency and fairness into this formerly opaque market," said Wheeler. "It's yet another indication that there is always room for innovation and independence in the financial services world."

Although financial terms have not been revealed, apparently TA's acquisition was not a leveraged buyout. Wheeler said the company is more of a growth play, explaining that eSecLending thus far has captured only a small portion of the large securities lending market. As a private equity firm with dozens

of large institutional investors among its limited partners, TA is also in a position to help eSecLending get more stock portfolios onto its platform. "That's one of the benefits TA brings to the table," said Wheeler. "It's very complementary, as many of TA's LPs would be natural users of eSecLending."

(c) 2006 Investment Dealers' Digest Magazine and SourceMedia, Inc. All Rights Reserved.

http://www.iddmagazine.com http://www.sourcemedia.com

1 Comments:

At 3:33 PM, Anonymous Anonymous said...

You have very interesting Blog. Do you have any other information about Citco or GlobeOp?
Which one is superior in the level of service being provided?

I have also found interesting sites that you may be interested to checkout:
In Hedge Funds
My Hedge Fund
Hedge Fund Net

Regards,

 

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