Nymex May Get Bid From Buyout Firm General Atlantic, People Say 2005-07-19 00:01 (New York) By Matthew Leising July 19 (Bloomberg) -- The New York Mercantile Exchange, the world's biggest energy market, may have a second bidder for a stake in the company, according to three exchange members. Buyout firm General Atlantic LLC is reviewing the exchange's finances and may make an offer in competition with a bid made in April by Blackstone Group LP and Battery Ventures, said the members, who asked not to be identified. General Atlantic is the biggest holder of shares of Archipelago Holdings Inc., which has agreed to merge with the New York Stock Exchange. The Nymex is considering changes in ownership structure as it reacts to moves by competitors including Intercontinental Exchange Inc., owner of London's International Petroleum Exchange, which plans to raise $115 million in an initial public offering. The Chicago Mercantile Exchange sold shares to the public in December 2002 and has risen more than eightfold since. ``There's been a world-wide boom in derivatives trading and there's a lot of money looking for a way to get into that boom,'' said Craig Pirrong, a professor of finance at the University of Houston. ``Within the derivatives space, energy probably has the biggest upside potential.'' Nymex traded a record number of futures contracts July 15 and saw first-quarter profit double as energy prices climbed to all-time highs. The exchange's ownership is divided among 816 members, also known as seatholders, whose shares come with the right to trade commodities such as natural gas or crude oil. A seat sold June 24 for $2.5 million, a record, valuing the exchange at just over $2 billion. Blackstone Raises Bid Blackstone and Battery have completed their financial assessment of the exchange and last week raised their offer for 20 percent of the Nymex to $200 million from $185 million, the members said. Nymex's board has been considering the Blackstone and Battery offer since April. An investment by a buyout firm may be a prelude to an IPO. Two other buyout firms, Kohlberg Kravitz Roberts & Co. and Thomas H. Lee Partners, have also expressed interest in the Nymex, said the members. Ruth Pachman, a spokeswoman for Kohlberg Kravitz, and Jenna Focarino, a representative of Thomas H. Lee, both declined to comment. Pat Hedley, senior vice president of Greenwich, Connecticut- based General Atlantic, declined to comment. The firm was founded in 1980 and has $8 billion under management. Nymex spokeswoman Anu Ahluwalia also declined to comment. Open Outcry As the Nymex considers changes in its ownership structure, it also faces a challenge to the traditional method of trading futures face to face in an open-outcry pit. Intercontinental Exchange ended the IPE's open-outcry trading in London in April, shifting to an electronic system. Nymex is in the process of opening an exchange in London that will seek to lure traders who used to work on the floor of the IPE. It is also planning a trading floor in Dubai. The New York Stock Exchange, the world's largest stock market, plans to become a public company through a takeover of Archipelago. The combination will give the stock exchange better electronic trading capabilities. --Editor: Dieterich, Merz Story illustration: For news on exchanges, see {NI EXC }. To graph Nymex crude oil futures over the past year, see {CL1 GPO D }. For more oil stories, see {OTOP }. To contact the reporter on this story: Matthew Leising in New York at (1) (212) 617-1151 or mleising@bloomberg.net. To contact the editor responsible for this story: Robert Dieterich at (1) (212) 617-4485 or rdieterich@bloomberg.net. [TAGINFO] 78948Z US CN ICE US CN 17757Z US CN NI NRG NI CMD NI OIL NI GAS NI CRUDE NI OILPROD NI EXC NI NYMEX NI US NI MNA NI WIN NI SCR #<141602.831928># -0- Jul/19/2005 2:34 GMT #<530827.122724># -0- Jul/19/2005 4:01 GMT