Reuters | The Chicago Board Options Exchange’s biggest investor
boosted his stake in the No. 1 U.S. options market on Monday in a bet
that puts CBOE’s value on the eve of its initial public offering at $3
billion.

Thomas Caldwell, chairman of Toronto-based Caldwell Investment
Management, paid $2.475 million for one seat and $2.45 million for
another, he told Reuters.

The seat sales value CBOE shares at $29.69 and $29.38 each, respectively, above the expected IPO range of $27 to $29. The purchases signal Caldwell’s view that CBOE shares will fetch even higher prices when they begin trading Tuesday.

“Maybe I’m paying a premium to the IPO price, maybe I’m paying a discount, but you aren’t going to be able to buy at $29 tomorrow anyway, it will open at $32 or $33,” Caldwell said in a telephone interview.

The IPO is to be priced after markets close Monday, and shares are to begin trading on Nasdaq OMX Group Inc’s Nasdaq Stock Market Tuesday.

“It doesn’t matter — we are going to own it for a year or two anyway,” Caldwell said. “It’s a good business.”

While stock market volatility fueled by debt woes in Europe has hurt IPOs by other U.S. companies in recent weeks, Caldwell and other members are betting that being the last major North American stock exchange to float shares will play in CBOE’s favor.

With 102.6 million shares due to be outstanding after the IPO, seat prices suggest a market value of just over $3 billion for the exchange.

CBOE runs a private seat-sale market that confers membership in the exchange. After the IPO, memberships will be abolished and the market will be closed.

Caldwell made his name in U.S. exchange investing when he bought up New York Stock Exchange memberships. He was its second-biggest investor before its shares began trading publicly in 2006.

Monday’s purchases bring the total number of CBOE memberships under Caldwell’s control to 56.