R.J. O’Brien & Associates LLC, the Chicago derivatives brokerage, is back in the hands of its founders after two private equity firms opted to sell back the control acquired in 2007 at the height of a flurry of deal-making in the sector.
The firm is one of the largest independent U.S. futures brokers, started in 1914 as a cash butter and egg specialist called John V. McCarthy & Co., and part of a coterie that developed Chicago’s role as the self-styled risk-management capital of the world.
“We are proud to resume our majority ownership and to support the management team in the implementation of its strategic expansion globally,” said John O’Brien, who started at the firm in 1975, in a statement.
The family sold control to Spectrum Equity Investors and Technology Crossover Ventures for an undisclosed sum in 2007 but retained a minority stake. The futures broking industry has been consolidating over the past decade, while efforts to take firms public have had a checkered recent history.
MF Global Holdings Inc. has seen its shares lose two-thirds of their value since a 2007 initial public offering.
R.J. O’Brien had $2.2 billion in client funds on deposit as of Oct. 31, according to the Commodity Futures Trading Commission. Gerry Corcoran will remain chairman and chief executive of the company, and no immediate changes to management or strategy are planned, according to a company spokeswoman.
The 2007 stake sale saw RJ O’Brien eschew an initial public offering while increasing operations focused on retail-level investors and expanding its presence in energy and metals markets. This year the brokerage has opened offices in Houston and Winnipeg.
The terms of the O’Brien repurchase weren’t disclosed.
Pressure on major customers such as banks, hedge funds and other asset managers drove a falloff in trading-volume growth that had accompanied electronic expansion and product launches.
On Friday, German market operator Deutsche Boerse AG announced a second write-down related to its $2.7 million purchase of the stock-options-focused International Securities Exchange in 2007, on a 50% slide in sector valuations over the last three years.
Spectrum’s portfolio has included a number of financial technology investments including RiskMetrics Group, the financial analytics specialist acquired earlier this year by MSCI Inc. , as well as media and information firms such as ancestry.com.
Technology Crossover Ventures has also been active in the financial sector, with broker and adviser Penson Worldwide Inc. going public while options specialist Thinkorswim Group was acquired by online broker TD Ameritrade Holding Corp.
