(Crainâs)
â Peregrine Financial Group Inc., the third-biggest
Chicago-based futures broker, agreed to buy rival Alaron Trading for an undisclosed price as it builds its retail futures business.
The combined company, which brings together two family-owned
businesses in an industry increasingly dominated by global behemoths, will
have about $425 million under management, according to executives from both
companies. The acquisition is the first of what Peregrine President and
Chief Operating Officer Russ Wasendorf Jr. says will be a series of purchases en route to a target of $1 billion under management.
âYou need to get to critical mass,â Mr. Wasendorf says in a
telephone interview. More acquisitions are in the offing, he adds, particularly as
new rules for currency trading that go into effect later this year force smaller
brokers to seek bigger pools of capital.
âIt absolutely increases our economy of scale,â Mr. Wasendorf says. âAs we continue
to add more assets, it drops directly to the bottom line.â
Peregrine Financial Group, which does business as PFGBest, was
founded by Mr. Wasendorfâs father and has about 225 employees. Alaron has fewer than
100. Steve Greenberg, Alaronâs founder, will stay on, running his business
as a unit of the larger company. Mr. Wasendorf said he would keep as many
âkey employeesâ on Alaronâs staff as possible.
The brokerages have competed in the retail futures business for
20 years. Last year was a particularly brutal one, as interest rates slumped to
near zero, curtailing the profits that such firms typically make on
the assets they hold for their customers.
Earlier this year, Mr. Wasendorf, Mr. Greenberg and Mr. Greenbergâs sister and Alaron
executive Carrie Greenberg met at the Capitol Grille in Streeterville to hash
out a shared vision of their businesses. They signed the deal on May 14.
â Peregrine Financial Group Inc., the third-biggest
Chicago-based futures broker, agreed to buy rival Alaron Trading for an undisclosed price as it builds its retail futures business.
The combined company, which brings together two family-owned
businesses in an industry increasingly dominated by global behemoths, will
have about $425 million under management, according to executives from both
companies. The acquisition is the first of what Peregrine President and
Chief Operating Officer Russ Wasendorf Jr. says will be a series of purchases en route to a target of $1 billion under management.
âYou need to get to critical mass,â Mr. Wasendorf says in a
telephone interview. More acquisitions are in the offing, he adds, particularly as
new rules for currency trading that go into effect later this year force smaller
brokers to seek bigger pools of capital.
âIt absolutely increases our economy of scale,â Mr. Wasendorf says. âAs we continue
to add more assets, it drops directly to the bottom line.â
Peregrine Financial Group, which does business as PFGBest, was
founded by Mr. Wasendorfâs father and has about 225 employees. Alaron has fewer than
100. Steve Greenberg, Alaronâs founder, will stay on, running his business
as a unit of the larger company. Mr. Wasendorf said he would keep as many
âkey employeesâ on Alaronâs staff as possible.
The brokerages have competed in the retail futures business for
20 years. Last year was a particularly brutal one, as interest rates slumped to
near zero, curtailing the profits that such firms typically make on
the assets they hold for their customers.
Earlier this year, Mr. Wasendorf, Mr. Greenberg and Mr. Greenbergâs sister and Alaron
executive Carrie Greenberg met at the Capitol Grille in Streeterville to hash
out a shared vision of their businesses. They signed the deal on May 14.