TCV, Summit in $250m minority deal

Technology Crossover Ventures and Summit Partners have acquired a minority position in trading platform Liquidnet, making for one of the largest non-control, financial services private equity deals.

Technology Crossover Ventures and Summit Partners have paid $250 million (€189 million) for a minority position in institutional trading platform Liquidnet.

The deal is being heralded as one of the largest private equity financings for a non-control stake in a financial services company. According to a source close to the transaction, the investment will value Liquidnet at close to $2 billion.

Palo Alto-based TCV and Boston-based Summit are each contributing $125 million. The capital was used to prove liquidity for Liquidnet’s shareholders, the source added – many founding shareholders cashed out, though chief executive officer Seth Merrin retained most of his holdings.

Venture backer TH Lee Putnam Ventures also sold off a majority of its shares. The firm had participated in a $10 million series C financing round back in early 2002. The firm is an affiliate of Thomas H Lee Partners in Boston.

New York-based Liquidnet allows institutional investors to trade large blocks of stocks directly across international markets. Trading is anonymous without intermediaries or information leaks, according the company’s Web site, and investors can trade large blocks of small-, mid-, and large-cap stocks with little to no market impact costs

San Francisco-based investment banking boutique FT Partners advised Liquidnet and managed the auction process.