Virtu Financial revealed today that the high-frequency trading firm intends to raise over $310 million by selling its shares later this month on the NASDAQ stock market (under the ticker symbol VIRT) for as high as $19 per share.
Virtu was founded by Vincent Viola, who became the poster boy for the HFT industry. He claims that his company, according to the roadshow prospectus, only lost money for one day out of 1,485 trading days, thanks to its proprietary “risk management strategy and technology.”
According to its own estimations, the company’s valuation after the IPO would reach about $2.5 billion. But Virtu has been on the IPO path before. In fact, the company had almost reached the finish line in the process of going public when Michael Lewis’s book “Flash Boys” created a media frenzy around HFT derailing its plans.
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“Flash Boys” was a damning accusation against the HFT business, describing the industry as using advanced tactics and privileged access to exchanges for rigging the financial markets in its favor at the expense of retail traders.
Industry spokespeople tried to shed a positive light on HFT by claiming it actually helped the markets by generating liquidity. However, this line of defense did not work, as soon after the book was published last year, a number of financial regulators announced that they were looking into market abuse by high-frequency trading firms such as Virtu and others.
In total, Virtu reportedly earned $190 million in 2014, up 4% compared with results in the previous year and more than double what it earned in 2012. Its total revenue last year was $723 million, up 8% from 2013. The company also says in its prospectus that it has four classes of common stock, with two of them having 10 votes per share compared with one for the other two classes.
The stocks varying voting power classes mean that even after the IPO, the founder’s family will maintain control of Virtu, with more than 93% of the overall voting power available. At the midpoint of the offering, the Viola’s family holding would be worth approximately $1.4 billion.