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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Analysis
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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Firm’s Recent Turmoil, Get Free Report
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.
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