Type of deal: Block trade of BSkyB shares
Amount: £430 million
Seller: Granada
Broker: BT Alex Brown
In such volatile financial markets, most investment banks are overwhelmingly concerned to reduce their exposures and risk-taking. So when BT Alex Brown took on a £430 million ($730 million) block trade in BSkyB shares towards the close of London trading on Tuesday October 13, it simply took the market's breath away. With equities volatile, BSkyB, a high-beta stock, has been even more volatile than the general market. It is illiquid, with only 30% of share capital in free float before this deal. And it has in the past traded as high as £7, hitting a low of£3.33 in February this year and rising to £5.50 in late September.
BT Alex Brown bought the block of 111.5 million shares, representing a 6.3% stake in BSkyB, from UK media and hospitality company Granada, paying £4 a share at a time when BSkyB had been trading at £4.40. It then rushed to unload the shares, mainly to US and UK institutions, at £4.04.
These kinds of deals are nerve-wracking at the best of times. "To take on such a large line of stock, given recent market convulsions and investor nervousness, was a particularly gutsy call," says the London-based head of equity capital markets at a leading rival firm.