Brokerage Knight Capital Group Inc. (KCG) has reached a deal to sell its credit-brokerage unit to Stifel Financial Corp. (SF), according to media reports on Sunday. Financial terms of the deal, which could be announced as early as on Monday, were not known.
New Jersey-based Knight Capital recently agreed to be acquired by electronic trading group Getco Holdings Co. for $1.4 billion. However, the company is exploring options to sell some assets that are not part of its core business.
According to the Wall Street Journal, the Stifel deal involves Knight's institutional bond sales and trading business, but does not include Urban Financial Group, which originates reserve mortgage loans. In addition, the deal will not include BondPoint, an electronic venue for trading bonds owned by Knight Capital.
Meanwhile, Bloomberg reported that Knight Capital is seeking to sell the unit, led by Al Lhota and Bob Lyons in New York, partly to reduce costs from long-term property leases. Bank of America Corp. (BAC) reportedly advised Knight Capital on the sale.
In August 2012, Knight Capital reached a $400 financing deal with a group of investors after recording a huge trading loss due to a software glitch that drove the company to the brink of bankruptcy. At that time, Stifel was among the group of six investors that agreed to provide financing to Knight.
St. Louis, Missouri-based Stifel is seeking to grab a larger share of the debt-brokering business. The company spent at least $1.7 billion on 24 acquisitions since Ronald Kruszewski became chief executive officer in 1997.
In November 2012, Stifel and smaller rival KBW Inc. (KBW) entered into a definitive merger agreement valued at over $575 million to create a premier middle-market investment bank with a specialized focus on the financial services industry.
KCG closed Friday's trading at $3.73 on a volume of 1.82 million shares.
SF closed Friday's trading at $38.04, up $0.41 or 1.09 percent on a volume of 528,611 shares.
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