Shares digital

Interdealer broker ICAP (IAP) has strengthened its equity derivatives offering with the acquisition of The Link Asset and Securities Company (Link). ICAP will pay up to £250 million for Link, including an initial consideration of £135 million, in a move welcomed by analysts.

Roger Tejwani, from independent broker Numis, says ‘Given the increasing complexity of investment strategies, the use of equity derivatives will continue to increase over the coming years.’

ICAP already offers some equity derivatives to clients but Link will considerably broaden this offering. Together with the initial £135 million, the broker will hand Link’s owners the value of net assets on Link’s balance sheet up to a maximum of £30 million. ICAP will also pay a deferred consideration equal to 25% of nine times the profit after tax for the year ended 31 March 2010.

Shares says: With continued market volatility equity derivatives are in demand and this looks like a shrewd move.

by: Simon Keane