Euroclear appoints Goldman to evaluate exit for its shareholders

Euroclear, one of the largest securities depositories in the world, has asked Goldman Sachs to evaluate options for its shareholders to sell their shares, according to three people close to the case.

Goldman Sachs is working with Euroclear's Board of Directors to breathe new life into a long-standing plan to create a process for investors to withdraw.

This could involve selling Euroclear, which is valued at around € 5.9 billion, to a buyer in the sector, to private equity, or via a listing, but nothing has been decided, the people said. Goldman and Euroclear declined to comment.

Euroclear is a settlement house based in Brussels, an essential element of financial market infrastructure where transactions are finalized. It belongs largely to its biggest users and holds more than 28 million euros of badets on behalf of investors.

This makes it a huge source of collateral needed to support transactions. Demand for guarantees is expected to increase in the coming years, as global observers tighten standards.

Analysts have long regarded the company as one of the last independent infrastructure operators to be bought by a stock exchange while avoiding competition concerns. The Americas Intercontinental Exchange (ICE) and the London Stock Exchange Group, two of the largest stock exchanges in the world, do not have large-scale settlement deals and both have been predisposed to potential buyers. However, both have publicly stated that they would prefer to remain as shareholders.

Euroclear's value of EUR 5.9 billion has been established over the last 18 months as Royal Bank of Scotland, Credit Suisse and Societe Generale have sold or reduced their holdings in OTC transactions.

Many large banks no longer want the regulatory responsibility badociated with managing a systemically important market infrastructure. ICE and LSE have acquired a stake of 10% to 5%.

Last year, the Board of Directors of Euroclear's operating company began to explore more formal ways to cash in other shareholders and appointed Moelis to lead the process. Goldman works on behalf of the holding company and Euroclear announced this appointment at an investor day organized two weeks ago.

But the projects are already unpopular with some of Euroclear's 120 shareholders, ranging from JPMorgan and Citigroup to smaller European financial institutions.

Some users are worried that Euroclear will raise prices to fund technological improvements and some European operators fear that the process will allow US financial institutions to dominate one of the few market infrastructures in the world. Systemic importance based in the euro area people familiar with shareholder thinking.

Some of the largest private equity groups in Europe have looked at the sector but do not want to buy without a simplification of the ownership structure, said two people.

"It's too big with too many shareholders and too confusing for a private equity group to buy," said an advisor to some of the biggest buy-out funds in Europe.

Euroclear has announced that it will inform its shareholders of the process during the second half of the year.