Reuters to float minority stake in Instinet broking arm

Reuters, the information provider, yesterday confirmed that work was under way to float a minority stake in Instinet, its broking arm, in the United States as it published third-quarter sales ahead of market forecasts.

Reuters, the information provider, yesterday confirmed that work was under way to float a minority stake in Instinet, its broking arm, in the United States as it published third-quarter sales ahead of market forecasts.

Peter Job, chief executive, also said that the group was in discussions with various parties about a further round of private equity financing for the Greenhouse fund, its internet incubator. His remarks were taken as confirming that a float of Greenhouse was unlikely in the short term.

Analysts have put a tentative value of £3bn on Instinet, but its fortunes are intimately linked to those of Nasdaq, the US stock market where it is a major player.

Instinet was a big driver behind the 16 per cent rise in group third-quarter sales to £888m. Instinet revenues climbed 46 per cent to £189m despite choppy securities market. The market consensus had been for an 11 per cent rise in sales to £850m group-wide.

Yesterday's upbeat comments did a lot to reassure market concerns that sales would be hit both by recent equity market falls and consolidation between investment banks, who are Reuters' biggest customers. Reuters shares rose 77p to £13.15, taking the rise since Wednesday to 20 per cent.

Mr Job said: "We have quite a favourable wind blowing here. We are really doing very well having decided to offer customers a low-cost information feed so they can pass information on to their own customers. This has been a major concern to all our customers in the internet world."

Reuters refused to be drawn on how much of Instinet would be sold, but Mr Job said the group intended to keep a majority stake. The purpose of the IPO, he said, was to support Instinet's expansion plans and provide an acquisition currency if required. Instinet has a major slice of the US equity broking market and has been seeking to expand into the European market.

"There is work to do in getting it IPO-ed. We will remain a substantial holder; it is strategically important to us ... There is a lot of acquisition activity in that area. Being free to participate with their own quote will be important."

Instinet has taken a stake in Tradepoint, the alternative stock market, and is believed to have considered bidding for the London Stock Exchange, although given the current lack of appetite among LSE holders for a deal this now looks unlikely.

Mr Job said he was reluctant to give any hostages to fortune in terms of a potential listing for Greenhouse, which is developing business in related areas. The operation was taking advantage of current market conditions to speed up the pace of investments. These now total 79, with £105m invested so far this year.