Icap acquires APB Energy

Inter-dealer broker Icap has acquired APB Energy for an initial cash payment of $15.5 million. Further payments, which are contingent on the future earnings of the business, will be made over four years, Icap said. APB brokers gas, electricity, weather and coal derivatives on its online platform, True Quote, and through traditional voice brokering.

The payment in 2003 will be paid in cash, while further payments in 2004, 2005 and 2006 will be made in cash, or Icap can decide to pay up to 65% in Icap shares. If the APB business continues to perform well, Icap estimates that additional payments will amount to around $30 million. But irrespective of APB’s future performance the total amount payable for this acquisition cannot exceed $100 million, Icap added.

APB currently has net assets of $4.4 million. The trader had revenues of $32.5 million and a normalised pre-tax profit of $8.7 million last year. All 165 of APB’s directors and staff are expected to remain with the company.

“APB Energy has a strong market position in electricity, natural gas, coal and other energy-related products. We believe that energy broking has significant long-term potential and that APB Energy can provide an outstanding entry for Icap into the US, Nordic and other regional European markets,” said Michael Spencer, Icap chief executive.

Icap has a 50-strong commodity derivatives business covering oils and oil products, bullion and precious metals, electricity, coal and weather derivatives – primarily out of London, plus small units in Sydney and Singapore – but until this acquisition it did not have a US presence. APB has European offices in Amsterdam and acquired Norwegian Energy Brokers in October 2001.