Summary: Private equity fund Silver Lake Partners and a subsidiary of Japan's largest investment bank, Nomura Holdings, have reached an agreement for the sale of Instinet, an electronic brokerage servicing institutional investors, by Silver Lake for an undisclosed amount in cash. Based on a recent profit estimate valuing Instinet at 20x earnings, the deal could be worth about $1 billion, or almost 5x the $207.5 million Silver Lake paid less than a year ago. Instinet hired Evercore in August to explore its options. Private equity funds typically hold investments over a longer period of up to five years, but will "flip" an investment when there's a good profit making opportunity. This is an important acquisition for Nomura, as its spokesman was quoted by Bloomberg saying, "We will be able to provide hedge funds and other institutional investors with value-added trading technologies and execution services." Instinet will also provide Nomura with greater global reach and a larger client base.
Related links: Nomura Press Release • Additional coverage: Bloomberg and WSJ • Nomura's Disappointing Earnings and Difficult Circumstances • Nomura Q2 Earnings Conference Call Q&A Session Transcript
Potentially impacted stocks and ETFs: Nomura Holdings (NMR), Evercore Partners (EVR), Investment Technology Group (ITG)
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