Tradeweb just went public at a $7.5 billion valuation. The company's president told us about the IPO process, electronic markets going mainstream, and what it means to be a public company
- Tradeweb, which runs electronic markets in bonds, derivatives and ETFs, held its initial public offering on April 4, raising over $1 billion.
- Billy Hult, president of Tradeweb, chatted with Matt Turner, Business Insider's executive editor, after the company went public.
- Hult spoke about the IPO process, what's next for Tradeweb, and the evolution of the fixed income markets.
Tradeweb's move to the public market is the latest in what has been an interesting ownership structure for the company over the years.
Refinitiv, a venture between Blackstone and Thomson Reuters, are majority owners in Tradeweb, in addition to a minority interest held by a consortium of banks.
Billy Hult, president of the company, told Business Insider's Matt Turner after the IPO that it felt like the "right time" to go public.
"We felt like the businesses had gotten mature enough," he said. "We've had these great partners over the years and we feel really confident we're gonna continue to have great partners, but we just felt like this was the right time for us."
Outside of the major exchange groups, Tradeweb is only the second company to go public whose focus is creating electronic trading venues for complex markets. MarketAxess, which holds significant market share in the US corporate bond space, listed in 2004.
"It's a statement around how mainstream electronic trading has become," Hult said. "I remember when you had to sort of fight for every trade, and sort of work really hard to get the clients off of the phone and onto the mouse. I think it's some version of a statement just around the mainstream-iness of the electronification on fixed income in a good way."
You can read the full interview here.
Matt Turner: So just to start, why IPO now? What brought that decision about?
Billy Hult: When you say now, you mean like today? Nice weather, springtime. Crowded midtown. You know, it actually was a beautiful day today. Today was such a fun, exciting day for the company. It really was.
Why now? We just felt like it was the right time. The company has had such an interesting ownership structure over all these years and we felt it was the right time to be a public company. We felt like the businesses had gotten mature enough. We've had these great partners over the years and we feel really confident we're gonna continue to have great partners, but we just felt like this was the right time for us.
Turner: How did you find the IPO process and what advice would you have for anyone thinking about it?
Hult: It's an interesting process. You gotta pace yourself ... kinda through it. It is kind of great to kind of go through it from the very, very beginning. I found all the different bankers that we worked with to be really great. There was a lot of teamwork involved. It was amazing to kind of be on the road and talk to the investors and kind of deliver the story, really the story of the company. That was really rewarding.
It was a whirlwind. We just got back from our roadshow really on Tuesday evening. We started in Boston, and we went to the west coast, San Francisco, LA, Denver, Kansas City, Chicago. It's a pretty cool thing though to kind of deliver the message and really deliver the message of your company.
Turner: Obviously we can see how the stock is trading, but what were the questions you were being asked on the roadshow and what was the kind of mood of investors you had talked to us about?
Billy: The mood was really positive. Sometimes you get really interesting questions about just the arc of the business and how these markets went electronic, and then obviously, kind of how much more room there is to go around all of these marketplaces. There's no real ... kind of by the end, you've heard a lot of the questions, so you're not getting any kind of big curve balls. But, I found the investors to be really excited about our story and all those conversations went really well.
Turner: What does it say about the marketplace now as - Tradeweb is going public, MarketAxess as a competitor is also public - what does it say about the evolution of electronic markets and electronic bond trading, fixed income trading in particular, that there's now those two companies listed?
Hult: It's a great question by the way. I think on some level, maybe it's a statement around how mainstream electronic trading has become. I remember ... I've been at Tradeweb since 2000, I've been the president of the company since, I think it was '07 or '08. I remember when electronic trading wasn't mainstream, and I remember when you had to sort of fight for every trade, and sort of work really hard to get the clients off of the phone and onto the mouse. I think it's some version of a statement just around the mainstream-ness of the electronification on fixed income in a good way.
Turner: What does going public allow you to do as a company now?
Hult: One thing it allows us to do is, in a funny way, kind of have this interview. I think the recognition and the brand of the company is gonna change. I think that's a good thing. It's obviously gonna give us a currency in the market and allow us to look at interesting things, so I think it's gonna do a lot of positive things for the company.
Turner: You talked about the journey of electronic marketplaces, where are we in that evolution?
Hult: It's a good question. That's one of the questions, by the way, you get kind of on the road, so I should be decent at answering it. It sort of depends on the market that you're talking about. That being said, what's interesting is all of these markets that we are in still have room to grow. Tradeweb started off in the US government bond market all these years ago, and there's still to go in government bonds around electronification, so they all kind of do.
But depending on the market that we're talking about ... In the baseball world, it would be kind of like fourth or fifth inning in a lot of these different businesses that we're in. That gives you a lot of kind of confidence and energy to kind of get after this kind of second half of it all.
Turner: You talked about the government bond market, what still needs to or can evolve that?
Hult: Yeah, I always kind of think about ... When I think about trades that get electronified and I think about trades that aren't getting electronified, sometimes I think about those types of trades as large market-moving trades or any trade that has some version of complicatedness, and therefore negotiation.
The clients are getting so much more sophisticated in terms of how they engage with the market. We have a new functionality that we call AIX, which was a pretty nice hit as we talked about it on the road. That's allowing clients to find liquidity more efficiently and more easily out in the marketplace. It's a search, right?
Sometimes when we talk about what Tradeweb does, we talk about it in terms of just a basic search, a search for liquidity, and as that search gets more sophisticated, I think we're gonna see obviously further electronifications of the market.
Turner: You mentioned liquidity there, obviously, a hot topic always. So where are we? How do you see that and that discussion evolving also?
Hult: It's changed a lot. One of the consequences of regulation has been around how different banks are set up, fundamentally set up in fixed income, and that puts a pretty strong sort of stress or premium on getting more efficient in terms of how you search for liquidity. One of those, obviously, is the all-to-all trading, which is the hot topic in credit. But in the rates market, it sometime is about these things that we call AIX, which is an algorithm. It's a market data feed that allows clients to be more efficient in terms of how they find liquidity.
You asked me what inning we are around electronification. We're still kind of mid-innings around the real sophistication of the market, and a sophistication is going to help the electronification going forward.
Turner: In terms of some of the markets that are newer to electronification, what are you most excited about? Where do you see opportunity?
Hult: You'd almost still describe kind of credit as newer in some ways, even though MarketAxess is obviously a great company, and we've been in credit the last couple years making a significant amount of progress; but, I feel like there's still a lot of room in credit to go, then I always kind of think in some of these subset markets.
So Tradeweb's really strong in the TBA mortgage market, I think that there's a ton of room in these subset markets. So for example, specified pools in mortgages, I think, could have a lot of benefit from electronification.
Turner: What impact does this electronification having on kind of buy side dealing desks and on the sell side also? How are they changing to adapt to this?
Hult: Again, I think they're getting more sophisticated. I think it, ultimately, it brings down the cost of trading. We're doing something in credit that we call netspotting, which is both efficient and a cost saver to the buy side. So everybody's looking at how they can get more sophisticated, run their businesses more efficiently, and obviously, savings is a big deal in the market.
You can watch the entire interview here: