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All ratings were affirmed. The full list of the affected ratings can be found at the end of this press release. We understand that IGBB will be acquired with enough cash and working capital to support its daily operations and to meet regulatory requirements. Tullett Prebon will fund this by raising a bank bridge facility of GBPmillion, of which the remaining balance will be used to fund GBP million in maturing July notes.
With this transaction, TP ICAP will become the number one global voice broking business in the industry operating across more than 30 countries. The completion of the transaction is conditional on bondholder consent and shareholder approval expected in the first quarter ofwith regulator and competition authority approval expected later in Provided consent is received within this timeframe, we would expect the transaction to complete towards the end of In addition, ICAP will receive a GBP million loan repayment, some of which we expect to be used to pay down existing facility drawings with any surplus available for future investment.
While the sale of IGBB will result in a icap global broking business plan, less diverse revenue base, the remaining businesses have demonstrated relatively better stability of earnings than IGBB, which is a positive for bondholders. Over recent years, IGBB faced a series of restructuring exercises in adapting to depressed broking activity, a result of structural and cyclical industry challenges.
With a less diverse revenue base, creditors will be more narrowly exposed to the volumes and activity in the two remaining core businesses. The businesses will require continued investment to maintain and support growth which is a commitment that could come under pressure should one of its core platforms underperform materially.
Beyond these core businesses, ICAP NewCo will also retain and build upon its "Euclid Opportunities" early stage financial technology investments which are largely focused on solutions for managing post-trade risk.
The FCA have provisionally confirmed that ICAP NewCo will cease to be subject to continuing consolidated regulatory capital requirements; its existing waiver is due to expire in The rating could see upward pressure should the firm benefit from a sustained increase in earnings while reducing debt levels and committing to a policy of gross debt-to-EBITDA leverage below 1.
Outside of this, the remaining business could face downward pressure should one of the core platforms for the business underperform materially. Underperformance in the business, or debt-funded corporate transaction, that results in leverage of more than 2.
While the business is likely to face cyclical and structural pressures that have negatively affected broking activity across the sector, the enlarged footprint offers greater potential to offset such decline through further cost management.
Should the transaction not complete or execution on the combination of the business not go according to plan, we may revisit our outlook. However, the stable outlook reflects our base case that the combination will proceed as intended.
With the transaction, the enlarged Tullett Prebon business will nearly double its broking revenue. From this base, we expect EBITDA levels to rise as cost synergies are achieved and to mitigate potential revenue pressures.
With initial gross debts of GBP million, we expect the business to deleverage to approximately 2.
We anticipate industry revenues to face further pressure. While we view favourably the market leadership positioning of the enlarged TP ICAP, and do expect market participants to continue to seek the support of voice and hybrid voice-electronic forms of broking in their search for liquidity, the overall revenues derived from these activities is expected to decline, albeit at a slower rate than recent periods.
Outside of a shift towards more efficient electronic forms of execution, volumes in the voice-hybrid arena are expected to face pressure as bank balance sheets see continued pressure to deleverage and clearing mandates drive market participants to reduce activity or shift to more liquid, cleared products.
For TP ICAP, we do note that the business has reinforced its strengths in energy and commodities, which are products that may be less susceptible to these pressures.
With this transaction, TP ICAP is in a better position to reduce costs than previously by eliminating duplicative costs and reducing the share of revenue paid to brokers.
The proposed new waiver is expected to take effect on completion, with a duration of 10 years. With this waiver, TP ICAP will need to retain earnings such that it is able to eliminate excess goodwill over the ten year period following completion.
The waiver, along with its other requirements to limit debt levels, net-debt leverage and interest coverage, is a positive development for creditors as TP ICAP is more likely to prioritise retaining capital than otherwise. However, a ratings upgrade could occur should performance in the business improve materially, on a sustainable basis, such that gross debt-to-EBITDA falls below 2x.
Industry pressures are likely to make this a challenge. Our base case is that both completion and targeted synergies are realistic.Global Broking Placement Interview candidates at ICAP rate the interview process an overall positive experience. Interview candidates say the interview experience difficulty for Global Broking Placement at .
Are you being shortchanged? Share. Tweet. In addition, TP ICAP plans to make strategic organic investments of around £15 million in Global Broking, Energy & Commodities and the Data & Analytics divisions to accelerate the .
TP ICAP, which changed its name from Tullett Prebon after snapping up ICAP’s voice broking business, also announced it would slash its annual cost savings target from £ million to £75 million as it refocuses on investment in the business.
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ICAP plc is a market leader in the global money broking business with a market share of 26% and daily transaction volumes exceeding US$ 1 trillion of which 50% is executed electronically. In India ICAP with over 40 staff members is the largest interdealer broker in Government Securities; Corporate Bonds; Fixed Income Derivatives.