LMAX Group has engaged Morgan Stanley and KBW to explore a sale or public listing that could value the institutional trading firm at up to $5 billion.
Summary
- LMAX tapped Morgan Stanley and KBW to review strategic options for up to $5 billion.
- A Nasdaq IPO is preferred, although a sale, SPAC merger or European listing is still possible.
- The foreign exchange business of LMAX allows the company to wait out the weak conditions of the crypto market.
Three people familiar with the confidential discussions said LMAX is working with Morgan Stanley and KBW, the investment bank owned by Stifel, as it reviews several strategic options.
According to one of the people, LMAX could pursue a direct sale, merge with a special purpose acquisition company, or launch an initial public offering in the United States or Europe. A Nasdaq IPO is currently being considered as the company’s preferred option, the person added.
No final decision has been made, and one person familiar with the process said LMAX is under no pressure to enter the public market while cryptocurrency prices remain weak. According to the source, the income from the operation of the foreign exchange company gives the opportunity to wait for better market conditions.
A potential valuation of 5 billion would be five times the level attached to LMAX in July 2021. At the time, private equity firm JC Flowers agreed to buy a total of 30% for $300 million, valuing the group at about $1 billion.
LMAX said JC Flowers’ investment will support its expansion across foreign exchange and cryptocurrency markets. The transaction also provided the company with additional capital as regulated financial firms began to develop services linked to digital assets.
Nasdaq leads LMAX’s listing options
London-based LMAX operates trading facilities and infrastructure for banks, brokers, hedge funds and asset managers. According to the company, its services include foreign currency and digital assets through an agency operating model that gives customers access to transparent order books and low-latency systems.
Britain’s Financial Conduct Authority regulates the group, a status used by LMAX when developing products for institutions requiring regulated environments. The company’s focus differs from retail-led crypto exchanges because its customers include financial firms seeking execution, liquidity and settlement services.
LMAX also benefited from increased institutional participation following the approval of Bitcoin exchanges in the United States, according to people familiar with the company’s review. Those sources linked the expansion of regulated crypto products to renewed interest from banks and asset managers seeking exposure to digital assets.
Even with that interest, the timing of any listing remains uncertain. One person familiar with the discussions said that the weakness of the current crypto market has reduced the need for fast transactions, while LMAX’s foreign exchange business continues to protect it from relying entirely on digital asset trading.
The Nasdaq debut will place LMAX alongside a growing group of cryptocurrency and market infrastructure companies seeking access to US capital. However, people familiar with the talks said sales and other listings are still being considered, leaving LMAX free to change if market conditions or buyer interest improve.
LMAX is building its own crypto institutional stack
Over the past year, LMAX has added products that connect custody, collateral management and round-the-clock trading. In February, the company launched a 24/7 multi-asset exchange designed to support foreign currencies, precious metals, digital assets, commodities and tokenized securities.
LMAX said the platform allows institutional clients to trade both traditional instruments and tokens outside of normal market hours. By combining several asset classes in one place, the company sought to expand its operations beyond cryptocurrency trading.
A month earlier, Ripple invested $150 million in LMAX through a strategic deal aimed at increasing institutional use of the RLUSD stablecoin. According to the companies, LMAX will integrate RLUSD into its trading and settlement network, giving institutional clients another option for moving funds between digital asset markets.
LMAX continued that product in May with the launch of Kiosk, a hosted portal that allows customers to deposit digital assets into LMAX Custody and use them as collateral in multiple markets. As previously reported by crypto.news, Kiosk supports foreign exchange, precious metals, cryptocurrencies, contracts for difference and perpetual futures.
According to LMAX, the portal combines storage, shared access and trading support within a single workflow. Its tools include deposits, withdrawals, API authentication management, WalletConnect access, security controls and treasury management.
The company said that Kiosk is aimed at institutions that want to use digital assets without dividing storage and trading functions between several systems. Clients can store assets in LMAX Custody while using them to support positions offered through the group’s trading network.
The LMAX update comes at an active time for crypto adoption. Kraken Payward parent agreed to acquire Bitnomial platform derivatives, while Bullish, owner of CoinDesk, announced a $4.2 billion deal to buy Equiniti and expand into tokens and transfer agency services.
At LMAX, strategic reviews provide its advisors with several ways to inform the business of foreign exchange, crypto issuance, storage and token markets. Morgan Stanley and KBW will evaluate those options as the firm weighs buyer interest against the timing and potential price of a Nasdaq listing.
