Very insightful post Carcosa. Thank you. |
Thank you maddox and Carosa, very good replies and comments.
Best of luck |
Thanks Carcosa, great input.
You suggest some factors that would discount the value for Parameta. OTOH Parameta's data is unique and can only be sourced from them, there is no 'consolidated tape'. This would suggest a premium valuation.
By floating a larger minority stake it would potentially open-up the possibility of other OTC providers to monitize their data via Parameta. |
 A rough and ready valuation by me would be based on similar companies in the US i.e.
MSCI Inc. (NYSE: MSCI), EV/EBITDA: 30.29x
Moody's Corporation (NYSE: MCO): EV/EBITDA: 26.78x
S&P Global Inc. (NYSE: SPGI) EV/EBITDA: 29.32x
The adjusted EBITDA for Parameta Solutions in 2024 was £86m
Applying something like x29 that would give rise to a valuation of £2.5b
A similar valuation occurs using EV/EBIT (unsurprisingly).
However a discount would have to be given because Parameter is small compared to their 'comparators', its a UK domiciled company and its a minority listing (at least 10%-20% per listing requirements). Therefore say that valuation can be 50% i.e. £1.25b.
In terms of cash coming into TCAP as a result of the listing that could be £135m after tax.
TCAP can only return cash to shareholders and that would be determined by how much of a minority stake is listed less tax. So I would not expect a gigantic payout. However in capital terms the shareprice should appreciate considerably to reflect the new, demonstrated, valuation.
The benefit of listing a minority stake would be:
Retaining Control Over a High-Growth Asset
Capitalizing on a Premium Valuation
Reducing Debt Without Losing Future Upside
Establishing a Market-Driven Valuation for a Future Sale
Leveraging the U.S. Market’s Liquidity & Investor Base
Avoiding a Hostile Takeover or Activist Pressure
There are just too many uncertainties to come up with an accurate valuation but overall it should be substantial. |
My £416m valuation for Parameta is based on its proportion of the value of the whole of TCAP currently c. £2bn. So, if Parameta is worth £2bn alone the rest of TCAP is currently worth zero. This suggests that Mr Market is seriously under pricing the firm.
To achieve a valuation of £2bn Parameta would need to be on a p/e of 28.
Relx (REL) is on a p/e of 36, would you like to point to other data businesses that command high valuations? |
Popit - your valuation seems correct |
2-3 years ago Parameta was valued at 1.5B GBP by phase 2 partners! So it is much higher than your made up numbers. That valuation was publicly touted by a Phase 2 in 2023. £416m is completely gibberish.
It's value is closer to 2B USD at least. More likely 2B GBP. Probably. Please read the older reports about the valuation by a US hedge fund. |
2-3 years ago paramedics was valued at 1.5B USD. So it is much higher than your made up numbers. That valuation was publicly touted by a US hedge fund. £416 is completely gibberish.
It's value is closer to 2B USD at least. Probably. Please read the older reports about the valuation by a US hedge fund. |
Most of proceeds of 10%. |
Well they talk about returning "most of the proceeds" - so sounds like quite a high proportion - but pick a number. |
Going to retain far more than half. Likely to let 10% go |
Hi XAMF,
That £416m value for Parameta is based on a p/e of 8.1 for the whole business. If they float it and achieve p/e of 16 then the half they retain will maintain the current market cap at c. £2bn and give them say £400m to distribute to shareholders. Now a p/e of 16 may be conservative for a unique data firm such as Parameta - looking at comparative firms arguably highly conservative.
So if all goes ahead, and based on that p/e 16, we're potentially looking at a 20%+ cash return. However, its going to be a difficult for management to judge when's the best time to press the button in view of US market uncertainty.
Anyway IMHO there's no need to hurry and I feel the 2Q 2025 timeframe might be unrealistic if the US heads into a recession. Nevertheless, great to have this hidden value underpinning the share price. |
they paid $6oomm for liquidnet tapping shareholders for most of it in a rights issue its a block trading equity venue/dark pool for buy sides that nobody wanted to buy and rather than impair the purchase have fudged the numbers by chucking credit business facing banks and relative value broking business that previously rolled up the tullet/icap broking business line///thinking nobody would notice |
Thanks Maddox. That helps.
Hopefully we'll see the US market start to recover by the time Parameta is listed. |
My EBIT figures are Liquidnet £53m 13% Parameta £83m 21%. So, on a 'part of the sum' straight proportion basis Parameter is worth £416m and Liquidnet £257m. |
What net worth do you feel Liquinet contributes to TCAP's overall bottom line now? 42% of the company's EBIT came from Liquinet and Parameta last year? |
look carefully at the businesses they now conveniently classify as liquidnet v asset they purchased 4 or 5 years ago and should have wriiten down value of by now |
still prefer marex now partially listed or BGC GFI - most of the former tullet prebon management are there and whats left is just moving numbers around - look at iliquid net for where they now include relative value broking which is an old icap business and is just window dressing |
They also probably want to list at an optimum time and right now the US market is quite volatile. I think they are just really saying, we are ready to list when the time is right. |
I have taken the view that the board have every intention of listing a minority stake. Having clearly flagged their intention this caveat allows them to explore a better alternative option should one become available in the interim. Regardless of the route to market this will set a clear valuation for Parameta and (as Popit explains above) should add considerable value to TCAP's bottom line. |
Why the uncertainty though around the possible listing?.....are they just dangling a juicy carrot? |
The market is not yet really recognising the huge value here
Parameta as a company on its own will probably be worth more than the current Market Cap of ICAP at £2 billion
The 2 companies combined should be valued at about £4 billion or about £5 per share |
They are listing a 'minority stake'.
Taken from FY results:
º Focus is a US listing and maintaining a majority stake in the long-term, while keeping other options open. Liquidnet and Parameta Solutions accounted for 42% of Group adjusted EBIT (29% 2023).
º Would expect to return most of the proceeds of any Parameta listing to our shareholders.
º Majority of future potential value upside would indirectly accrue to TP ICAP shareholders. |
Hi, not looked at these for a while so catching up,I'd noted previously that the Parameta value was £1.5bn, and given they are retaining a majority stake does that mean that circa £735m could be returned to shareholders?. Originally I was under the impression that the full IPO value was going to be returned to shareholders.Can anyone clarify please, thanks. |
I too have topped up around 254. I like the prospect of a potential Parameta float (with the majority of proceeds going to shareholders) and have taken the view that this is highly likely to happen. As Maddox has stated above this stock is also a direct beneficiary of market volatility.
It will be interesting to see if we get a better response once US markets open. |
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