In May 2021 the news was out, Marex Spectron, rebranded to simply Marex planned to go public on the London Stock Exchange. For background please read my 20/05/2021 article.

Sadly today it appears the market is not ready, which is a shame because Marex is an interesting business and in some ways with its range of global operations represents the spirit of ‘Global Britain’, trading around the world successfully.

MarketWatch in their Dow Jones News supplied article made it pretty clear, the current environment is not conducive to an IPO (unless you are Pharma, High Tech or Data). However while that is understandable in tactical terms at a strategic level we have to dig deeper. It seems too often analysts and investors find positive business basics, boring. Marex’s brokerage is well managed, recent acquisitions have strengthened the service offering both horizontally and vertically, but that does not paper over the issues, which are:

  1. Markets don’t get Inter-Dealer Brokers which remain stubbornly under-valued compared to electronic trading venues and exchanges. A valuation giving a market cap of 1:1 on revenues is basement level.
  2. Analyst coverage is weak to non-existent. IDBs must get out and promote themselves both more and smarter.
  3. The markets are infatuated with electronic trading, easy to understand, and unlike IDB’s have few pesky and expensive (and smart) humans involved in the process. A bean counter’s wet dream.
  4. Marex lacks a functioning data business. This is a glaring hole in the Marex line up. Data services are in vogue, Marex is strong in Commodities, Energy, and Carbon, areas where price discovery is more important than ever, and for other IDBs growing twice as fast. Building from a low base, data businesses are attractive to investors, and Marex has a franchise open for Information services exploitation

What businesses like Marex must realise is that their data is a core strategic asset. Data not only defines their business (Price Discovery) and when put to work becomes an invaluable and large source of revenue.

Marex’s decision to at least postpone an IPO makes sense. Now if Marex decided to leverage their data IP that would make cents (and lots of dollars) too. 

Keiren Harris 10/06/2021

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