Goldman Takes Minority Stake in High-Speed Telecom Provider Perseus
Bank makes $20.5 million investment in Perseus Telecom
By BRADLEY HOPE
April 21, 2015 10:00 a.m. ET
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.
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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.”