BGC Partners (BGCP) Agrees to Sell Insurance Brokerage Business

Continuing with its efforts of enhancing shareholder value, BGC Partners, Inc. BGCP has entered an…

Continuing with its efforts of enhancing shareholder value, BGC Partners, Inc. BGCP has entered an agreement to sell its Insurance Brokerage business to The Ardonagh Group Limited for a cash consideration of $500 million. Completion of the deal, expected in the second half of this year, is subject to customary closing conditions, including the receipt of required regulatory approvals.

BGC Partners’ chairman and CEO, Howard W. Lutnick, stated, “The agreement to sell our Insurance Brokerage business for $500 million reflects the significant value we have created since entering this market in 2017. Like our previous sales of eSpeed and Trayport, as well as our IPO and tax-free spin-off of Newmark, this sale further demonstrates our commitment to driving shareholder value.”

He added, “We expect to use the proceeds to accelerate Fenics growth and to repurchase shares and/or units. The sale proceeds will provide additional capital to accelerate Fenics growth, which increased 40 percent year-over-year in the first quarter of 2021. Additionally, our Fenics Growth Platforms, which include Fenics UST, Fenics GO, Lucera, Fenics FX, and other newer standalone platforms, grew more than 82 percent over the same period. While the growth of our Insurance Brokerage business was industry-leading, we believe the scale and scope of the Fenics opportunity is far greater, with potential to drive shareholder value materially higher.”

Per the terms of the agreement, the entire equity of the entities that comprise BGC Partners’ Insurance Brokerage business will be acquired by Ardonagh, for which, Ardonagh will pay $500 million, subject to limited adjustments.

Notably, during the 12 months ended Mar 31, 2021, BGC Partner’s Insurance Brokerage business contributed nearly $191 million in revenues.

Cantor Fitzgerald & Co. and Bank of America Corporation BAC are serving as financial advisors for the deal.

So far this year, shares of BGC Partners have gained 41.6% compared with 32.1% growth recorded by the industry.

Currently, the company carries a Zacks Rank #4 (Sell).

A couple of better-ranked stocks from the same space are mentioned below.

Interactive Brokers Group, Inc.’s IBKR Zacks Consensus Estimate for current-year earnings has been revised 6% upward over the past 60 days. Shares of the company have gained 26.8% over the past six months. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Morgan Stanley’s MS earnings estimates for 2021 have increased 20.8% over the past 60 days. Its shares have gained 46% over the past six months. The company currently carries a Zacks Rank of 2.

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