Who will bid for Refco’s FXCM stake?
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Foreign Exchange

Who will bid for Refco’s FXCM stake?

The weeklyFiX understands that FXCM has reached an agreement with Refco’s creditors to auction the 35% stake the defunct and disgraced futures broker held in the company.

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The auction will start on Monday and initial bids have to be submitted by June 29. A panel of Refco creditors will then launch a second round for the highest bidders, which will end 29 July. The final winner will be announced in August. Drew Niv, chief executive of FXCM has confirmed the auction is about to take place, but declined to comment further.

Refco paid a total of $42 million for the stake, which it bought in two tranches in 2002 (20%) and 2003 (15%). After Refco filed for bankruptcy in late 2005, FXCM tried to buy the stake back for $110 million. However, the price was rejected as too low by creditors.

FXCM does not publish figures showing its profitability, but it is believed that a valuation of around $1.3 billion was put on the company at the time it tried to buy the 35% stake back. The auction may not attract the normal throng of venture capitalists because it is for a passive stake that would not give them the level of influence they typically seek. However, several major banks are believed to have already made enquiries and the auction may offer an attractive means of accessing the increasingly important retail market; it will be interesting to see who they are.

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