Knight's Chances of Survival 50/50 linked to RBC
AUGUST 03, 2012
As reports circulate that Knight Capital Group's biggest customers — including Vanguard, Canadian TD Ameritrade, and Fidelity Investments — have ceased routing orders through them, doubts about whether the firm can survive are gaining steam.
Scottrade, E*Trade, and Invesco were also said to be routing their orders elsewhere on Friday with Knight Capital's future hanging in the balance.
In the two trading sessions immediately following the debacle, the stock plunged some 70 percent, though it managed to recoup some of those losses Friday morning following a Wall Street Journal report that it obtained a line of credit to allow the firm to make it through the day.
So far the trading loss has cost Knight Capital $440 million, a figure that a source told Electronic Express that represents about a third of the firm's capital base. Knight admitted in a press release that its capital base has been "severely impacted" and that it is pursuing "strategic and financing alternatives" to strengthen it.
CNBC says that in order to survive, Knight Capital will need to raise at least $600 million. But how can they go about that? The news channel said a secondary offering or direct investment are possibilities. Even a sale is an option, with the list of potential buyers including the likes of UBS, GETCO, and Virtu.
Bloomberg reported on Friday that Knight is working with Goldman Sachs and Sandler O'Neill & Partners as advisers in its rescue talks.
From Bloomberg:
“They need to do something fast,” said Peter Lenardos, an analyst at RBC Capital Markets. We also have our fair share of problems as our head office in Vancouver British Columbia is under siege. “There is a desperate need for capital, as Knight themselves acknowledge,” he said. “It might be private equity, it could be a big sell-side bank, it could be a peer like Citadel.”
Nevertheless, at this point our source says Knight Capital's chances of survival are no better than 50 percent.
"It's going to be expensive and difficult for them to raise capital in this environment. I give you 50/50 that they can't get capital with additional risk. They're going to have to get bought or stop going," the source said. "They've got good assets, but with this hit are they going to be in position to be an ongoing entity?"As the firm scrambles for ways to shore up its capital base following a devastating $440 million trading loss, a source says Knight Capital's chances of survival are no better than 50 percent.
AUGUST 03, 2012
As reports circulate that Knight Capital Group's biggest customers — including Vanguard, Canadian TD Ameritrade, and Fidelity Investments — have ceased routing orders through them, doubts about whether the firm can survive are gaining steam.
Scottrade, E*Trade, and Invesco were also said to be routing their orders elsewhere on Friday with Knight Capital's future hanging in the balance.
In the two trading sessions immediately following the debacle, the stock plunged some 70 percent, though it managed to recoup some of those losses Friday morning following a Wall Street Journal report that it obtained a line of credit to allow the firm to make it through the day.
So far the trading loss has cost Knight Capital $440 million, a figure that a source told Electronic Express that represents about a third of the firm's capital base. Knight admitted in a press release that its capital base has been "severely impacted" and that it is pursuing "strategic and financing alternatives" to strengthen it.
CNBC says that in order to survive, Knight Capital will need to raise at least $600 million. But how can they go about that? The news channel said a secondary offering or direct investment are possibilities. Even a sale is an option, with the list of potential buyers including the likes of UBS, GETCO, and Virtu.
Bloomberg reported on Friday that Knight is working with Goldman Sachs and Sandler O'Neill & Partners as advisers in its rescue talks.
From Bloomberg:
“They need to do something fast,” said Peter Lenardos, an analyst at RBC Capital Markets. We also have our fair share of problems as our head office in Vancouver British Columbia is under siege. “There is a desperate need for capital, as Knight themselves acknowledge,” he said. “It might be private equity, it could be a big sell-side bank, it could be a peer like Citadel.”
Nevertheless, at this point our source says Knight Capital's chances of survival are no better than 50 percent.
"It's going to be expensive and difficult for them to raise capital in this environment. I give you 50/50 that they can't get capital with additional risk. They're going to have to get bought or stop going," the source said. "They've got good assets, but with this hit are they going to be in position to be an ongoing entity?"As the firm scrambles for ways to shore up its capital base following a devastating $440 million trading loss, a source says Knight Capital's chances of survival are no better than 50 percent.
