Man Financial interested in RefcoLLC
- Thread starter RefcoLLC
- Start date
Man Group got a steal on the firm.
The deal did not include the regulatory capital, which can be thought of as cash on hand. So instead of paying cash for cash it was left in place. This allowed the deal to be valued at over $1B even though nowhere near that amount changed hands. The total consideration of the transaction is approximately $323million.
The hidden value is in the $2.8 billion of customer assets that are part of the transaction. The way the brokerage unit (the part of Refco Man Group bought) earns money is from commissions and fees from clearing and executing trades and also interest on customer funds. Brokerage houses earn income interest on customer deposits held off the balance sheet and also on margin they lend.
Historically Refco and Man Group's regulated brokers manage to make 1.7% or so on the regulated assets they have. So you can expect the chuck of Refco they bought to bring in $50million in Profit per year.
They also got $115million in tangible assets, like exchange seats that come with it that they can sell to offset the cash outlay. This deal pays for itself in two years tops, everything after that is gravy.
Also don't forget that the refco and man groups brokerage units are growing at 25% a year since 2000.
What a deal.
Trader/God
The deal did not include the regulatory capital, which can be thought of as cash on hand. So instead of paying cash for cash it was left in place. This allowed the deal to be valued at over $1B even though nowhere near that amount changed hands. The total consideration of the transaction is approximately $323million.
The hidden value is in the $2.8 billion of customer assets that are part of the transaction. The way the brokerage unit (the part of Refco Man Group bought) earns money is from commissions and fees from clearing and executing trades and also interest on customer funds. Brokerage houses earn income interest on customer deposits held off the balance sheet and also on margin they lend.
Historically Refco and Man Group's regulated brokers manage to make 1.7% or so on the regulated assets they have. So you can expect the chuck of Refco they bought to bring in $50million in Profit per year.
They also got $115million in tangible assets, like exchange seats that come with it that they can sell to offset the cash outlay. This deal pays for itself in two years tops, everything after that is gravy.
Also don't forget that the refco and man groups brokerage units are growing at 25% a year since 2000.
What a deal.
Trader/God
