20th Aug 2007 07:01
Close Brothers Group PLC20 August 2007 Embargoed for release 7.00am on Monday 20th August,2007 CLOSE BROTHERS GROUP PLC EXPANDS INTO DERIVATIVES WITH ACQUISITION OF INTEREST IN MAKO, AN EXCHANGE TRADED DERIVATIVES MARKET MAKER Close Brothers Group plc ("Close Brothers"), the specialist merchant bankinggroup, is to acquire a 49.9% interest in Mako Global Derivatives Executive, LLP("Mako"), an exchange traded derivatives market making group. The remainder ofMako will continue to be owned by the current management and employees. Theconsideration includes a further injection of capital by Close Brothers to fundfuture growth. Mako's core activity is trading listed options servicing a broad cross sectionof the bank and broker community. Mako is a key provider of pricing andliquidity in the main European equity indices (including the Eurostoxx, FTSE,DAX & AEX) and the global fixed income markets (including Bund, Bobl, Schatz,Short Sterling, Euribor and US Treasury options). Additional business linesinclude Investment Management and Sales Trading. As a volatility trader, Mako avoids being directly exposed to movements in theunderlying fixed income and equity markets. Additionally, Mako has a marketmaking, rather than a positional trading focus, and has developed a specialisedrange of proprietary software applications, analytical tools and risk managementmethodologies to enable the business to generate returns in both turbulent andsteady markets. These largely uncorrelated returns provide diversificationbenefits to Close Brothers, whilst at the same time avoiding the specific risksof over the counter derivatives trading. Commenting on the deal, Colin Keogh, Chief Executive of Close Brothers Group,said: "For some time we have been looking to extend our securities business beyond thecash equity and bond markets into the fast growing area of derivatives. Mako isthe ideal opportunity to do this, whilst complementing other areas of ourbusiness. The company has a solid management team, a strong culture and is in anexciting market with high growth potential." David Segel, Chief Executive of Mako, welcomed the Close Brothers investment: "This is a terrific development for Mako and we look forward to growing a strongpartnership with Close Brothers. With this substantial increase in capital Makowill aggressively pursue opportunities in electronic trading of derivatives inthe equities, fixed income and commodities markets globally. As well, theaddition of both capital and expertise will reinforce Mako's already strongposition in our core proprietary trading and investment management businesses." - ends - For further information, please contact: Close Brothers Group plc:Colin Keogh, Chief Executive +44 20 7426 4000Justin Clark, Head of Communications +44 20 7655 3784 Maitland for Close Brothers Group: +44 20 7379 5151Anthony SilvermanEmma Burdett Mako Group:Chris Welsh, Managing Director +44 20 7862 0400 Notes to editors: 1. Mako was founded in 1999 by CEO David Segel and Chief Technology Officer Kevin Sweet, who between them have 35 years' of experience in the derivatives market. The business employs around 100 people, predominantly in London. 2. The financial terms of the transaction have not been disclosed. Under the terms of the transaction, Colin Keogh will join the Mako Board. The investment is subject to receipt of regulatory clearance and certain other terms. 3. Within the global derivatives market, the vast majority of deals are struck over the counter ('OTC'). OTC contracts allow customisation and innovation and consequently generate higher margins for providers, but involve material counterparty risk and new product development risks. Mako focuses on the exchange traded segment of the derivatives market. Exchange traded derivatives are standardised contracts which have daily settlement prices published by the relevant exchange. Additionally, counterparty credit risk is minimised as parties contract through a central clearing house. 4. Global growth in the turnover of exchange traded derivatives has been impressive; since 2000 turnover has increased at c.30% per annum. Fixed income products comprise the majority (c. 88% by turnover) of the exchange traded derivatives market, with equity index products and currency making up the remainder (c. 11% and 1% respectively). 5. Statistical information on the derivatives market is available at the website of the Bank for International Settlements, at www.bis.org. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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