LEE AMAITIS, the controversial chief executive of BGC Partners, is poised for a bumper windfall if the London-based broker proceeds with plans for a flotation this year.
The firm, which is owned by Cantor Fitzgerald, is believed to have consulted Citigroup on an initial public offering (IPO) that would coincide with the anniversary of the September 11 terrorist attacks. Cantor Fitzgerald lost most of its American staff in the atrocities.
Under Mr Amaitis, an outspoken broker from Brooklyn who has spent years working in London, BGC has expanded aggressively, trebling in size since it was founded in 2004.
However, industry observers last night cautioned that the firm would have to convince Wall Street that its recent acquisition spree will bear fruit if the planned flotation is to succeed.
Cantor Fitzgerald raised more than $300 million of debt last year, as BGC launched a series of acquisitions.
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BGC, named after Bernie G. Cantor, the founder of the firm, bought ETC Pollak, a French broker, last October. This followed its acquisition in May of Maxcor, a US-listed broker.
At the same time the firm has been wooing staff from rival brokerages with generous signing-on bonuses.
Cantor has been seeking to repair the damage done to its business in the wake of the 9/11 attacks. When revenues at Espeed, Cantor’s screen-based subsidiary that was floated on Wall Street at the height of the technology boom, came under pressure from competition and sliding fees Cantor decided to rebuild its voice-brokerage business. BGC has since become the third-largest inter-dealer broker by size. It acts as a gobetween for banks seeking anonymity when trading bonds, derivatives or equities.
A flotation of BGC would enable the firm to tap into investor appetite for inter- dealer brokers, which offer strong profit margins and growth rates. Senior staff at BGC will be looking at the success of GFI Group, a rival that had its debut on Nasdaq last year. GFI, which has about 1,100 brokers, has since seen its share price more than double.
BGC is said to have consulted Citigroup bankers in New York about a flotation. However, little detail has emerged about the firm’s profitability or the nature of an IPO.
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According to the most recent figures filed at Companies House, BGC lost $3.6 million after revenues of $200 million in 2004. That compared with profits of $11.5 million a year earlier. However, these figures exclude any boost BGC may have gained from its acquisition of Maxcor.
It is also unclear if Cantor plans to float all of BGC. Reports suggested that Cantor, which controls nearly half of Espeed, could delist the electronic brokerage and merge it with BGC ahead of a flotation.
Cantor has a complex partnership structure that’s controlled by Howard Lutnick, the chairman and chief executive. Because it is a private partnership, Cantor is not obliged to disclose any financial details.
Later this year, Mr Lutnick will end his five-year pledge to donate 25 per cent of profits to the widows and families of staff who died on September 11. However, the firm will continue to bear the cost of medical insurance for another five years.
Cantor declined to comment.
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Feuds, lap dancers and the widow’s might
THERE is something about the world of money broking that encourages long-running feuds and multimillion-pound legal actions. It attracts players with monumental egos, even by Wall Street and City standards, in a macho workplace culture that would be unacceptable almost anywhere else.
The business, in which inter-dealer brokers put financial firms in contact with each other and act as dealing platforms for privately trading bonds and other instruments, is expanding fast.
Dealers are highly specialised and highly paid, and there are not enough of them, meaning endless Dangerous Liaisons-style rounds of hiring and poaching. These have often led to court action.
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The decade-long feud between Icap, founded and run by Michael Spencer, one of the richest men in the City, and Cantor Fitzgerald, spilt over into the High Court in 2002. Cantor lost 658 employees in the attacks on the World Trade Centre, and in the aftermath, when the survival of the business was still in doubt, Icap poached three key staff.
The court heard lurid tales of visits to lap-dancing clubs, constant foul language and aggressive bullying of staff.
Cantor itself has its roots in a vicious feud. Howard Lutnick, designated heir apparent to Bernie Cantor, the founder, has been accused by Mr Cantor’s wife, Iris, of seizing control as his mentor lay in hospital with kidney disease.
Iris challenged the appointment of Mr Lutnick as chairman, claiming that it violated the family’s rights. The two reached a settlement after Mr Lutnick sued Mrs Cantor, but their relationship never recovered. She barred him from Bernie’s funeral and the two have since spent several years locked in litigation.
Martin Waller
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SIX DECADES OF CANTOR
1945: Bernie G. Cantor founds BG Cantor & Co
1981: Bernie moves firm to World Trade Centre
1983: Howard Lutnick joins
1996: Lutnick appointed chairman of Cantor Fitzgerald as Bernie develops kidney disease
May 96: Lutnick reaches settlement with Iris Cantor stipulating that he will be chairman. Lee Amaitis moves to London
July 96: Bernie dies
2001: 658 staff die in 9/11 attack
2004: BGC is set up