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October 18, 2005 at 08:00 PM
NEW YORK (HedgeWorld.com)–Refco Inc. announced Monday (October 17) that it is in advanced negotiations with a group of investors for the sale of Refco’s futures brokerage business, conducted through Refco LLC, Refco Overseas Ltd., and Refco Singapore Pre. Ltd., as well as related subsidiaries.
The group pursuing a purchase is led by J.C. Flowers & Co., the announcement said. J.C. Flowers is a private equity firm specializing in financial services run by Christopher Flowers, formerly of Goldman Sachs & Co. Goldman is serving as Refco’s financial adviser.
Mr. Flowers, who worked on mergers and acquisitions at Goldman, is the largest shareholder of Shinsei Bank Ltd. and the Enstar Group Inc.
The announcement said that Refco expects that it and the Flowers group will enter into a memorandum of understanding shortly and will execute definitive contracts soon thereafter. But it cautioned that there “can be no assurance that any agreement ultimately will be reached or that the sale will be completed.”
The weekend was rife with rumors concerning Refco’s fate. Many of those rumors involved Man Financial, the brokerage arm of Man Group plc, the publicly traded hedge fund firm. But early Monday morning, Man issued this statement: “Contrary to market speculation, Man Group confirms that it is not currently in discussions with Refco or its advisers regarding a Refco acquisition.”
The wording allows, of course, for the possibility that Man Group was formerly in such talks but terminated them some time prior to the statement. David Browne, a spokesman for Man, declined to expand on the statement, which he said “means exactly what it says.”
The proposed deal with the Flowers group would leave uncertain the fate of Refco Capital Markets, a prime broker, and Refco Securities LLC, a broker-dealer, both of which were shut down last week.
