Bats IPO has five times more demand than supply, but firm won’t receive any of the capital

Rick Steves

There seems to be a pattern on how Bats Global Markets announces newly listed ETFs on its Marketplace and the timing of news about its scheduled Initial Public Offering (IPO). Three days after filing with the US Securities and Exchange Commission (SEC) sent on April 4, indicating 11.2 million shares for sale at a price […]

Bats IPO has 5x more demand than supply

There seems to be a pattern on how Bats Global Markets announces newly listed ETFs on its Marketplace and the timing of news about its scheduled Initial Public Offering (IPO).

Three days after filing with the US Securities and Exchange Commission (SEC) sent on April 4, indicating 11.2 million shares for sale at a price between $17 and $19 each, the company announced the inclusion of two new ETFs from WisdomTree to its U.S. market. By then, the number of ETFs listed on the US market rose to 72.

Yesterday, Bats published a press release stating the price of each share would be $19.00, while increasing the amount of them from 11,200,000 of common stock to 13,000,000, with some stockholders granting underwriters a 30-day option to purchase up to an additional 1,995,000 shares. Coincidentally, or not, the exchange operator had announced two newly listed ETFs a few hours earlier, by State Street Global Advisors (SSGA).

The asset management business of State Street Corporation (NYSE: STT) issued for the first time at Bats Marketplace the listing of the SPDR DoubleLine Emerging Markets Fixed Income ETF (Bats: EMTL) and the SPDR DoubleLine Short Duration Total Return Tactical ETF (Bats: STOT). This raises the number of ETFs listed at Bats exchange to 74.

Bats executed 26.2% of all ETF trading in February and was the number 1 U.S. market for these securities. Given such high numbers, regular announcements of newly listed ETFs are to be expected.

The originally plan of Bats Global Markets was to sell little over $200 million in its Initial Public Offering, having raised the stakes to $244 million in the April 4 filling, but the expected amount has grown to approximately $253 million.

Only current stockholders will be selling shares, which means Bats will not benefit directly, moneywise, from the IPO. Bats found demand over five times the number of shares originally offered. The company is valuing itself at around $1.8 million, more than double of its first, and canceled in 2012, public offering of $760 million in valuation.

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