By Bradley Hope
Goldman Sachs Group Inc. made a $20.5 million investment in
Perseus Telecom, a provider of high-speed telecommunications for
exchanges, banks and other financial institutions, the companies
said Tuesday.
The investment is for a minority stake in the company, said Jock
Percy, CEO of Perseus.
Perseus derives more than 80% of its revenue from
financial-services clients, who use the company's services to
connect to exchanges and markets across the world, according to the
company.
The growth of Perseus and investment from Goldman Sachs show how
banks and other financial firms are increasingly trying to catch up
in a global arms race for speed, driven in large part by
high-frequency traders who have developed cutting-edge technology
to help them respond within microseconds to changes in the
market.
In 2008 and 2009, high-frequency traders pioneered the use of
microwave networks to shave milliseconds off the time it takes
information to travel between market centers. The most famous
corridor for those networks is between the futures exchanges of
Chicago and the stock exchanges whose data centers are dotted
around New Jersey.
A portion of Perseus's business involves selling bandwidth on
microwave networks, but a large part of it still relies on
traditional fiber optic networks, Mr. Percy said.
Perseus also offers clients the ability to send their trades
through computers located within the data centers of the exchanges,
a practice known as "co-location" that was also popularized by
high-frequency traders. Positioning computers in the data centers
reduces the distance to the matching engines that pair up trades
and allows customers to send their orders to buy and sell
securities quickly.
"The growth story is we are a truly global company," Mr. Percy
said in an interview. "Doesn't matter if you're a small hedge fund
in Sydney trading in Europe or a major e-commerce company trying to
get into Ukraine, Mumbai or Jakarta. We provide the
connections."
The company provides connections to more than 300 exchanges and
other private marketplaces in 18 countries, according to Mr. Percy.
The funds would be used to expand into another 23 countries, he
said.
Terry Doherty, director of Goldman Sachs' specialty lending
group, said in a statement that Perseus's business performance was
"exceptional" and they had "the potential to dramatically shift the
way that the global markets engage by introducing faster and more
secure managed services to the industry."
Write to Bradley Hope at bradley.hope@wsj.com
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