Morning Coffee: Why Citadel Securities won't go public soon. The most aggressive boss in finance?
If you work for Citadel Securities and you have notional stock that you think that you may soon be able to cash out from during an IPO, the Ken Griffin has news for you: you won't.
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Bloomberg reports that Griffin has ruled out an IPO for Citadel Securities for the foreseeable future. Going public doesn't make sense like it used to. “The quilt work of regulatory burdens on public companies has become so great that you’re seeing a rapid diminution in the number of public companies, and you’re seeing privately held firms stay private much, much longer," Griffin stated yesterday.
An IPO can be an opportunity for employees holding stock to sell at higher prices, thereby making vast amounts of money. At the time of Goldman Sachs' IPO in 1999, for example, a 1% stake in the firm was worth $165m and 221 partners became very rich. If and when Revolut's proposed $40bn IPO occurs, a long list of Revolut shareholders including employees and investors, face huge paydays.
It's not clear whether Citadel Securities employees have been awaiting or expecting an IPO, or how many hold its notional stock and how much. Citadel Securities doesn't release global accounts, but accounts for UK-based Citadel Securities (Europe) confirm that "certain employees" receive payments under a "Citadel Securities Notional Equities Program." Two years ago, there was a flurry of excitement at the potential for an IPO when Citadel Securities sold a $1.2bn stake to venture capitalists Sequoia and Paradigm. The Financial Times quoted a source at the time as saying that this would pave the way for an IPO. And when ex-Goldman Sachs executive Jim Esposito joined Citadel Securities earlier this year, it was supposed that a future IPO might have been part of his motivation.
Instead, it seems that Citadel Securities might simply be open to partial ownership by private equity for the moment. Griffin told Bloomberg that an unnamed private equity firm offered to invest $5bn in Citadel Securities 'a few days ago.' It's not clear whether he accepted.
In addition to discussing Citadel Securities' non-IPO yesterday, Griffin divulged that he would be open to accepting a minority investment in Citadel, his hedge fund. Maybe that investor could be BlackRock, which is reportedly acquiring a minority stake in Millennium too?
Separately, alongside the glossy backstory of Howard Lutnick's rise at Cantor Fitzgerald and recent promotion as Commerce Secretary in the new Trump administration, Forbes notes there are some darker shades to Lutnick's past. "The whole firm is about f——— people,” says one former Cantor employee. “It’s about squeezing people." Another says that people are "very scared" of Lutnick. “I witnessed this stuff first-hand. I witnessed the bullying. I witnessed the aggression.”
Lutnick is also credited with being hard working, “absolutely brilliant,” and “very, very smart.” That he's not always especially friendly might be unsurprising given that he gained control of Cantor by having its eponymous founder declared incapacitated with kidney disease in 1996.
Meanwhile...
Pay for Jane Street staff won't be revealed during the Millennium court case. Millennium had asked about Jane Street’s compensation and retention policies for all employees. (Bloomberg)
PwC's 1,030 UK partners were notified earlier this week that a larger-than-usual round of partner retirements would take place at the end of the year. (Sky)
Deutsche Bank hired Alexander Hecker from Lazard as vice chairman of global M&A. (Bloomberg)
DCM banker Priyanka Satpathy resigned from Deutsche Bank in London. (Global Capital)
People in the US feel stuck in their jobs and are suffering from pent-up resentment. It's worse in the tech industry. (Axios)
The $12 billion Brevan Howard Master Fund gained 6.1% in November through to November 15. (Bloomberg)
Three Bank of America bankers in India are leaving after allegedly tipping off selected investors of upcoming secondary offerings. (Financial Times)
Corporate credit card abuse is becoming more common. “One guy bought his whole family’s Christmas presents with the company credit card. He said he traveled a lot and the company owed this to him.” (WSJ)
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