The post Knight Capital-Getco merger sale of non-core assets continues, with reverse mortgage originator Urban Financial sold for $80 million.
KCG Group — the company resulting from the merger of Knight Capital and Getco — has announced the sale of Urban Financial for $80 million to an investor group led by financier Brian Libman. Urban is one of the largest originators of home equity conversion mortgages, also referred to as reverse mortgages, in the U.S.
KCG shares (NYSE:KCG) have performed poorly, down about 20%, since the Knight Capital-Getco merger was completed at the end of June (see chart below). While KCG management has denied that Hotspot FX is for sale, it certainly is possible that a further drifting share price may place more pressure on KCG management to further pare non-core assets, and focus on the main equity market making business resulting from the merger.
And with the forex sector — along with Hotspot FX — recovering nicely in 2013 to set all-time highs in trading volumes, it would certainly be a good time from a valuation standpoint to look at a sale of Hotspot FX. While we previously estimated that a sale of Hotspot FX could nab somewhere in the $150-$200 million range, that number could be significantly higher now if current trading volumes remain.
KCG share price over the past month since the merger (Source CNBC):
For the KCG press release on the sale of Urban Financial click here.