This story has been amended to clarify that Bats’ acquisition of Direct Edge Holdings LLC did not add to its debt.
Bats Global Markets Inc., an exchange operator, is a rare offering in the current biotech-heavy initial public offering market.
The company has set a price range of $17 to $19 a share for its IPO and is planning to sell about 11.2 million shares. At its mid-range price point, Bats could raise $107 million.
Bats Global Markets plans to list the stock on its own exchange under the symbol BATS.
The offering is being underwritten by 13 firms, with Morgan Stanley and Citigroup as the lead underwriters. Several of the underwriters are investors in the company, which the company itself lists as a conflict of interest, so BATS had to appoint Sandler O’Neill & Partners as an independent underwriter.
Here are four things to know before BATS starts trading:
The second attempt
BATS was initially going to go public on March 23, 2012, but had a “serious technical failure” on its BZX exchange during the IPO auction, which caused it to cancel the deal. In the new prospectus, the company said this software bug also halted another stock for five minutes.
‘These technical failures damaged our reputation and resulted in increased regulatory scrutiny of the event by the SEC and other governmental authorities,” the prospectus states.
The company said it has since put precautions in place to prevent future glitches.
It bills itself as an alternative
The company said it was formed “as an alternative” to the NYSE and the Nasdaq after the founders saw “increased consolidation” in the U.S. markets. It commanded 21.1% of the U.S. equity market in 2015 and operates four U.S. securities exchanges called BZX, BYX, EDGX and EDGA.
Bats Global Markets focuses on stocks and exchange-traded funds in the U.S. and Europe, stock options in the U.S. and the cash currency market globally.
The exchange uses its own Bats trading platforms, developed with proprietary technology, which it said was operational 99.994% of the time in 2015 and 99.991% of the time in 2014.
The exchange offers both competitive displayed pricing and undisplayed pricing.
Growing revenues, alongside debt
Bats Global Markets reported revenues of $1.5 billion in 2014 and $1.8 billion in 2015 on net income of $49.2 million and $82.2 million respectively.
The company has a substantial amount of debt with total liabilities of $937 million in 2015 and $702.4 million in 2014. Part of the reason for the debt—long-term debt totaled $687.5 million at the end of 2015—is funds needed for the acquisition of Hotspot FX Holdings LLC, a cash currency market for institutions, in March 2015. Bats also acquired Direct Edge Holdings LLC, which included the EDGX and EDGA exchanges, in January 2014.
The exchange makes money largely through transaction fees, regulatory fees and other fees associated with onboarding companies.
It is majority owned by investors
After the IPO is completed, its main investors will own about 82% of voting power of outstanding capital stock.
Because of the ownership, the company notes in the prospectus that if the investors vote similarly, they can elect the board of directors and control company policies without say from the company.