Based in New York, NY, Liquid Holdings Group (LIQD) scheduled a $50 million IPO with a market capitalization of $255 million at a price range mid-point of the week of July 22, 2013.
Ten other IPOs were scheduled for the week of July 22. The full IPO calendar can be found at IPOpremium.
S-1 filed July 9, 2013
http://www.sec.gov/Archives/edgar/data/1562594/000119312513285164/d484709ds1a.htm
Manager, Joint Managers: Sandler ONeill & Partners
Summary
Trying to do too much with an unproven platform, against very significant competitors. Perhaps LIQD wants to IPO and then try to sell itself to one of the majors.
Conclusion
Avoid, see ‘recent developments’ below
Business
Liquid Holdings Group has developed and provides proprietary next generation software technology that seamlessly integrates trading, real-time risk management, accounting, reporting and administration tools in a single platform for the financial services community.
Current and prospective customers include small to mid-sized hedge fund managers, asset managers, wealth management offices, family offices and financial institutions.
Recent developments – not good
“We are currently in the process of preparing our consolidated financial results for the second quarter ended June 30, 2013 and, therefore, our actual results for that period are not yet available and are subject to change. However, we currently expect that our total revenues for the second quarter will decline compared to the three months ended March 31, 2013.
“We expect that software services revenues for the second quarter will be approximately flat compared to the three months ended March 31, 2013. During the second quarter, as described elsewhere in this prospectus, we exited the over-the-counter brokerage business.
“As a result of the loss of revenue from the cessation of the over-the-counter brokerage business, we expect that our brokerage revenues will be significantly lower as compared to our brokerage revenues for the three months ended March 31, 2013.
“In addition, we currently expect to report a net loss for the second quarter of 2013 significantly in excess of the net loss recorded during the three months ended March 31, 2013, partly due to an increase in compensation expense as we have increased our headcount in an effort to grow our business and primarily due to a significant increase in share-based compensation related to the issuance of additional equity and other transactions in our equity subsequent to March 31, 2013.”
Competition
The software and services market for asset management and financial institutions software is a fragmented, highly competitive and rapidly evolving space.
There are three categories where LIQD faces significant competition:
• Trading Technology: Since LIQD supports multiple asset classes, it competes with numerous technology vendors who provide order and execution management software. These include RediPlus (a licensed product of Goldman Sachs Execution & Clearing, L.P.), Eze Castle Software, Inc., LineData Services S.A., Charles River Systems, Inc., The Abernathy MacGregor Group, Bloomberg L.P., The Bank of New York Mellon Corporation, or BNY Mellon, BNY ConvergEx Group LLC, Fidessa Group PLC, ION Trading, Inc., Investment Technology Group, Inc., or ITG, Orc Software Inc., RealTick LLC, NeoVest, Inc., SunGard Data Systems Inc., or SunGard, and Trading Technologies International, Inc.
• Accounting and Administration: Due to the comprehensive nature of LIQD’s post-trade services, LIQD competes with several major and small administrators that provide accounting and administration software and services, including BNY Mellon, The Citco Group Limited, Cogency Software, Inc., Northern Trust Corp., SEI Investments Co., SS&C Technologies Holdings, Inc., or SS&C, State Street Corporation, Fortis Bank NV/SA and BAML Capital Access Funds.
• Risk and Portfolio Management Solutions: There are numerous risk management solutions software providers in the market. LIQD competes with Risk Metrics and Barra (products of MSCI Inc.), ThompsonReuters, Statpro Group plc, OminHedge (a product of Delta Hedge Systems), Investor Analytics LLC, ConceptONE LLC, Calypso Technology, Inc., Numerix LLC, Imagine Software Inc. and a number of smaller consulting firms providing risk management and risk monitoring services.
Use of proceeds
LIQD expects to net $30 million from its IPO from the sale of 4.2 million shares. Shareholders intend to sell 800,000 shares.
Proceeds are allocated to investments in technology and sales and marketing functions, and for working capital and general corporate purposes.
$500,000 will be used to pay back a bridge loan and $1 million will be used to buy stock from the Chairman of the Board.
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