Urban Financial is Valuable Part of Knight Post-Crisis: Analyst

Urban Financial Group could stand to become one of the most valuable parts of Knight Capital Group’s business as the company reshapes and reforms in light of a software error that sent the company reeling last week. 

According to a client note written by J.P. Morgan Chase analyst Ken Worthington this week as reported in the Wall Street Journal, Urban is one of a couple of areas of value, despite the uncertain capital position of the company. 

“We think there is value at Knight, with numerous trading properties that are leaders in their respective areas, including Hotspot FX and reverse mortgage company Urban Financial,” Worthington wrote. “However, without the time to shop the properties around, Knight raises permanent capital and dilutes current investors.”

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Knight received a bailout announced Monday when several other companies on Wall Street stepped in with commitments to a $400 million stock sale. Blackstone Group LP, Getco, and TD Ameritrade Holding Corp, Stifel Nicolas, Jefferies Group Inc and Stephens Inc. purchased the shares for a 73% stake in the company. 

The company reported Tuesday that it is in good standing with the Depository Trust & Clearing Corporation (DTCC) and OTC. 

Written by Elizabeth Ecker

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  • Anyone have an idea of the intrinsic value of Urban Financial in the current market environment? I am guessing at least several hundred million. The real question, as MetLife undoubtedly learned is, what’s the intrinsic value of a money making reverse mortgage market leader in the current regulatory environment? Knight shareholders probably would not want to know.

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