Virtu Financial (VIRT) IPO Priced At $19, Top Of Anticipated Range

By Mani
Updated on

High frequency trading firm Virtu Financial raised $314 million in its initial public offering at $19 a share, the high end of the expected range of $17 to $19.

Virtu Financial’s shares commence trading Thursday, and are listed on the Nasdaq Stock Market under the symbol VIRT.

Virtu Financial shelved earlier IPO plans

As reported by ValueWalk, Virtu Financial postponed its planned U.S. initial public offering last year after its bankers suggested that the company wait until the public focus shifted away from scrutiny over the business of high frequency trading (HFT).

There had been much public discussion over the role of HFT in the modern market last year, and Michael Lewis added to the fire with his book Flash Boys. A few weeks before the release of the book, Eric Schneiderman, the New York Attorney General, criticized HFT, questioning the relationship between stock exchanges and trading firms.

In January, the Securities and Exchange Commission fined two exchanges $14 million for, among other things, not providing information on how certain order types worked to the public, but providing this information to high frequency trading firms.

However, last month, Virtu Financial revived its IPO plan. ValueWalk reported that the Virtu IPO, which values the company at $2.59 billion, is expected to raise $361.2 million when it sells 16.5 million shares this spring. Before all the hullabaloo last year, Virtu was valued at $3 billion.

Virtu Financial raised $314 million

Bloomberg has reported on Thursday that Virtu Financial raised $314 million in its IPO, after the HFT firm sold 16.5 million Class A shares for $19 each

Thus, arguably the delay in its IPO worked to Virtu’s advantage, with stock benchmarks near record levels. Moreover, two other IPOs, Etsy and Party City Holdco, also priced at the top of their offering ranges Wednesday.

Douglas Cifu, chief executive officer of Virtu Financial, said the company’s investors “got the story”. Commenting on the regulatory issues, he said: “What we do is not a new function or service. We spent very little time discussing regulatory issues or controversies”.

Virtu is a market-maker in equities, fixed income, currencies and commodities. It earns money through “spreads” – the difference between what buyers and sellers are willing to pay or accept in a trade.

The high frequency trading firm on average completed 5.3 million trades a day last year, and was a market maker in over 11,000 securities and other financial products, trading on more than 225 exchanges in 34 countries. The firm’s revenue rose 8.8% in 2014 to $723 million, while net income was $190 million, up from $182 million in 2013.

Virtu distribution chart

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