Acquision of interest in Mako
Close Brothers Group PLC
20 August 2007
Embargoed for release 7.00am on Monday 20th August,2007
CLOSE BROTHERS GROUP PLC EXPANDS INTO DERIVATIVES WITH ACQUISITION OF INTEREST
IN MAKO, AN EXCHANGE TRADED DERIVATIVES MARKET MAKER
Close Brothers Group plc ("Close Brothers"), the specialist merchant banking
group, is to acquire a 49.9% interest in Mako Global Derivatives Executive, LLP
("Mako"), an exchange traded derivatives market making group. The remainder of
Mako will continue to be owned by the current management and employees. The
consideration includes a further injection of capital by Close Brothers to fund
future growth.
Mako's core activity is trading listed options servicing a broad cross section
of the bank and broker community. Mako is a key provider of pricing and
liquidity in the main European equity indices (including the Eurostoxx, FTSE,
DAX & AEX) and the global fixed income markets (including Bund, Bobl, Schatz,
Short Sterling, Euribor and US Treasury options). Additional business lines
include Investment Management and Sales Trading.
As a volatility trader, Mako avoids being directly exposed to movements in the
underlying fixed income and equity markets. Additionally, Mako has a market
making, rather than a positional trading focus, and has developed a specialised
range of proprietary software applications, analytical tools and risk management
methodologies to enable the business to generate returns in both turbulent and
steady markets. These largely uncorrelated returns provide diversification
benefits to Close Brothers, whilst at the same time avoiding the specific risks
of over the counter derivatives trading.
Commenting on the deal, Colin Keogh, Chief Executive of Close Brothers Group,
said:
"For some time we have been looking to extend our securities business beyond the
cash equity and bond markets into the fast growing area of derivatives. Mako is
the ideal opportunity to do this, whilst complementing other areas of our
business. The company has a solid management team, a strong culture and is in an
exciting market with high growth potential."
David Segel, Chief Executive of Mako, welcomed the Close Brothers investment:
"This is a terrific development for Mako and we look forward to growing a strong
partnership with Close Brothers. With this substantial increase in capital Mako
will aggressively pursue opportunities in electronic trading of derivatives in
the equities, fixed income and commodities markets globally. As well, the
addition of both capital and expertise will reinforce Mako's already strong
position in our core proprietary trading and investment management businesses."
- ends -
For further information, please contact:
Close Brothers Group plc:
Colin Keogh, Chief Executive +44 20 7426 4000
Justin Clark, Head of Communications +44 20 7655 3784
Maitland for Close Brothers Group: +44 20 7379 5151
Anthony Silverman
Emma Burdett
Mako Group:
Chris Welsh, Managing Director +44 20 7862 0400
Notes to editors:
1. Mako was founded in 1999 by CEO David Segel and Chief Technology Officer
Kevin Sweet, who between them have 35 years' of experience in the
derivatives market. The business employs around 100 people, predominantly in
London.
2. The financial terms of the transaction have not been disclosed. Under the
terms of the transaction, Colin Keogh will join the Mako Board. The
investment is subject to receipt of regulatory clearance and certain other
terms.
3. Within the global derivatives market, the vast majority of deals are struck
over the counter ('OTC'). OTC contracts allow customisation and innovation
and consequently generate higher margins for providers, but involve material
counterparty risk and new product development risks. Mako focuses on the
exchange traded segment of the derivatives market. Exchange traded
derivatives are standardised contracts which have daily settlement prices
published by the relevant exchange. Additionally, counterparty credit risk
is minimised as parties contract through a central clearing house.
4. Global growth in the turnover of exchange traded derivatives has been
impressive; since 2000 turnover has increased at c.30% per annum. Fixed
income products comprise the majority (c. 88% by turnover) of the exchange
traded derivatives market, with equity index products and currency making up
the remainder (c. 11% and 1% respectively).
5. Statistical information on the derivatives market is available at the
website of the Bank for International Settlements, at www.bis.org.
This information is provided by RNS
The company news service from the London Stock Exchange
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