Knight Capital
Knight Capital Group Inc. (NYSE:KCG) opened its books to potential investors, in an effort to save the business after suffering $440 million trading loss due to technical failure. A report from Bloomberg cited the largest market maker is in talks with private-equity firms and a rival in the securities industry to invest or take over the business.

According to the report, Goldman Sachs Group, Inc. (NYSE:GS) and Sandler O’Neil & Partners LP, are advising Knight Capital in the ongoing deal to salvage the company from going under. A source familiar with the private discussions, who requested we not to disclose his identity, said the company needs to ink a deal as soon as possible. Knight Capital’s traders started looking for jobs as the company’s stock dropped significantly after the disastrous software bug. The company reached out to JPMorgan Chase & Co. (NYSE:JPM) for emergency funding.

Peter Leonardors, analyst from RBC Capital Markets in London said Knight Capital needs to do something fast as the company acknowledged that it is in desperate need for capital. According to him, possible investors are private equity, big sell-side bank, or a peer like Citadel.”
Justin Schack, managing director for market structure analysis at Rosenblatt Securities Inc. expressed that Knight Capital’s business is attractive to other players such as banks and equity capital markets businesses and firms.

In an interview with Bloomberg’s TV program “Market Makers,” Thomas Joyce, chairman and executive officer of Knight Capital, said the company is working hard in providing answers to its clients and counter parties. According to him, Knight Capital is diligently pursuing strategic investments, investors, or financing alternatives to keep the company in business. He declined to provide further information regarding the on-going discussions with potential investors. He said, “In terms of day to day activity, I can assure you our general counselor would prefer not to get into specific details.” He is confident the company will be able to re-establish its business.

Based on the data compiled by Bloomberg, Knight Capital Group Inc. (NYSE:KCG)’s investors hold $375 million convertible notes. Goldman Sachs, Oaktree Capital Management, Invesco Ltd, and Citadel Advisors are the biggest note holders. As of June 30, the company touted $365 million cash and $70 million revolving credit line.

A report from Forbes quoted Niamh Alexander, analyst from KBW, saying the board of Knight Capital needs to sell the company if it cannot secure funds. She said, “I believe there are buyers for the company and this is really its best alternative right now, else it might have to take a capital injection at a significant discount from a non public investor.” Based on the estimate of KBW, Knight Capital’s book value after its losses is approximately $800 million.

According to reports, Bank of America Corp (NYSE:BAC) and Citadel are in talks to rescue Knight Capital Group Inc. (NYSE:KCG) from extinction.

The company closed 63% down yesterday, to $2.58 per share.