Knight Capital Group (NYSE: KCG), parent company of Urban Financial is in talks to sell a bond-trading business unit to Stifel Financial Corp., weekend reports indicate.
Citing people familiar with the matter, the Wall Street Journal reported Sunday that Knight is exploring options to sell its non-core business assets and will sell the bond-trading business to Stifel in a deal that will involve Knight’s institutional bond sales and trading business but not its Urban Financial Group reverse mortgage arm. The talks come as a deal is expected to close between Getco LLC and Knight in the second quarter in which Getco will buy out Knight’s shares.
Knight has been exploring options to sell some assets that aren’t a part of its core business of buying and selling shares. The company hired Bank of America Corp. BAC -1.66% to reach out to buyers, people familiar with the matter have said. Knight ultimately considered deals for its fixed-income businesses outlined by four bidders, according to a person with knowledge of the talks.
An announcement on a deal with Stifel is expected as soon as this week, according to one of the people.
Bloomberg News reported the planned sale earlier Sunday.
The Stifel deal involves Knight’s institutional bond sales and trading business and doesn’t include Urban Financial Group, which originates reserve mortgage loans, one person said. The deal also doesn’t include BondPoint, an electronic venue for trading bonds that Knight owns, according to this person.
Knight moved into the business of brokering bond trades for financial institutions in 2008, when it acquired Libertas Holdings LLC, a boutique brokerage, for about $75 million. The unit added to Knight’s business of handling stock trades on behalf of institutions.
Knight acquired the reverse-mortgage division in 2010 as a way to add another product that the firm could trade with institutions but has weighed a sale, The Wall Street Journal reported last month.
Stifel is one of six companies that helped to bail Knight out following a trading glitch that cost the company $460 million in 2012, leaving it near bankruptcy.
Written by Elizabeth Ecker