Investors seeking deeper exposure to the financial services industry have a new initial public offering coming across the Atlantic.
Marex, a UK-based commodities broker and clearer, has confidentially filed with the U.S. Securities and Exchange Commission to go public in New York. Founded in 2005, Marex claims its platform offers “essential liquidity, market access, and infrastructure services to clients in the energy, commodities, and financial markets.”
People with knowledge of the matter said the firm is aiming at a valuation of around $2.5 billion.
If Marex achieves that feat, it would represent a staggering surge in its value. Its prior valuation target had been less than a billion when it previously planned to list in 2021.
The firm has been growing rapidly since then. Last year, it acquired rival ED&F Man, which opened the door to Marex’s deeper expansion into the U.S. This year, it accelerated expansion with the addition of TD Cowen’s primary brokerage business.
Almost 40 percent of Marex’s revenue came from the U.S. last year, and America’s share of its business is expected to grow further. It is among the top 10 futures dealers in the country.
Although it still operates as a broker, Marex management told the media in May it will now prioritize the clearing side of its business as it generates more reliable earning revenues than market-making.
It clocked strong growth in recent quarters. In the first six months of 2023, Marex’s gross revenue leaped nearly 80 percent to $1.2 billion. The firm employs about 1,800 people and has around 30 offices worldwide.
London… Not Calling
The snub of its home market comes as a fresh blow for the City of London, which is struggling to keep its historic status as a preeminent global finance hub.
It is not the only sizeable British firm to leap across the pond to list in North America. Arm, a leading chipmaker, listed in the U.S. this year, reaching a $55 billion valuation in one of the year’s biggest deals.
Marex had tried to launch in London in 2021 yet called off the float, citing poor commodity market conditions. Instead, its pivot to New York may be seen as a vote of confidence in the US IPO market for 2024, which has remained lukewarm for much of this year.
IPO activity, which started to pick up in recent months, should accelerate in the back half of 2024, especially if the Fed starts cutting rates next year, Goldman Sachs’ Dan Dees wrote in a note this month. Dees believes interest rates have somewhat “discombobulated” markets, and that has really undercut IPO volume, but the demand for financing will eventually see things return to normal.
“The environment for capital raising will be very robust — because it has to be, in the years ahead,” he says. “We are in the age of innovation, of accelerating innovation. All that innovation needs to be funded.”
Investors keen on Marex will keep an eye out for its official S1 form to follow up on this unique deal.
This article was produced and syndicated by Wealth of Geeks.