After the lofty $440 million loss resulted due to a software bug, Knight Capital Group (NYSE:KCG) is struggling to survive. The company scrambled with its advisers to hunt an investor or buyer.
Goldman Sachs Group Inc. was approached by the market maker, who is responsible for 10% of American equity, on 1st August to purchase the firm through trading positions obtained by mistake due to the malfunctioning of a computer. it has time till 6th August to complete the transaction.
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In an interview with Pimm Fox on Bloomberg’s ‘Taking Stock’, an analyst from Raymond James & Associates Inc, Patrick O’Shaughnessy said that there are a lot of questions regarding the liquidity of the company. It needs to find someone to invest or to buy it completely.
Knight survived the weekend after receiving interim finances for market making. Scottrade Inc. and TD Ameritrade Holding Corp. had sent trades to different places after the software bug of Knight acted up. Both the trading companies are routing their orders back. After tumbling down by 75% in the first two sessions after the software bug event, Knight’s stocks increased to 57% to $4.05 in New York.
Since Knight had opened its books to potential saviours, buyout firms include Silver Lake and TPG Capital. However, through sources it is clear that chances of a private-equity deal are little. People with direct knowledge regarding the matter have mentioned that New York-based Two Sigma Securities LLC and Chicago-based Citadel LLC were among the firms that have showed interest.
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Kenneth Pasternak, the former co-founder of the company in 1995 has stated over a phone conversation that the company is not likely to go out of business. A Knight spokeswoman, Kara Fitzsimmons has reportedly not replied to calls and e-mails.
Sander O’Neil & Partners LP are advisers of Knight during its difficult times.