Battle for brokerage heats up

NEW YORK - A new Dubai-US bid yesterday topped two recent offers to buy bankrupt Refco's futures brokerage unit as other potential suitors joined an attempt to block a deal with private-equity group JC Flowers.

Dubai Investment Group, the investment arm of Dubai's government, and billionaire Ronald Burkle's US buyout firm Yucaipa Cos, submitted a joint bid of about US$828 million ($1.19 billion) for Refco's most sought after asset.

This topped an offer of US$768 million from a group led by New York's JC Flowers that was struck more than a week ago and a second bid worth about US$790 million received from US broker-dealer Interactive Brokers Group five days ago.

Rival brokerage firm Man Financial, part of UK hedge fund Man Group, and Marathon Asset Management also registered their interest in Refco's futures unit, according to filings in US bankruptcy court. Sources said US private equity firm Apollo Management was also interested.

Judge Robert Drain said the emergence of the new bidders meant it was no longer so urgent to speed through a sale of the unit to Flowers, which made its bid after being approached by Refco, the largest independent US futures and commodities broker, as it spiraled into bankruptcy.

"I understand the moral commitment to [JC Flowers]," Drain told a courtroom packed with about 100 lawyers. "(But) there are improved prospects, as opposed to worse prospects, than when we were at the start of this case."

The New York-based company began disintegrating as its chief executive Phillip Bennett was charged with securities fraud over hidden debt.

The scandal shook some clients' faith in the brokerage, spurring them to pull out their investments.

- REUTERS