IntercontinentalExchange: Best in Class

NEW YORK (TheStreet) -- Such is the nature of securities exchanges these days that the most successful ones are those American investors are least likely to have heard of.

In part that's because the exchanges with the best prospects are in Brazil and China. One exception is Atlanta-based InterContinentalExchange (ICE), a nonentity at the start of the decade that has seen its stock leave U.S. competitors like NYSE Euronext(NYX), CME Group(CME) and Nasdaq OMX Group(NDAQ) in the dust since it went public in 2005.

ICE's growth mirrors that of energy markets. Ten years ago, giant energy trading companies, including banks like Goldman Sachs (GS) and Morgan Stanley (MS), and oil supermajors including BP(BP) and Royal Dutch Shell (RDS.A) were looking for an electronic energy trading platform to compete with Enron. After other start-ups and a potential alliance with the New York Mercantile Exchange proved unworkable, the companies settled upon ICE and its garrulous chairman and chief executive, Jeffrey Sprecher (pictured above).

Sprecher studied chemical engineering in college, but spent some 17 years building power plants around the country for a California-based company called Western Power Group.

"We were not all that different from shopping mall developers," is how he describes it.

Early in that career, Sprecher met junk bond pioneer Michael Milken in connection with the financing plans for the power plant construction operation.

"I was in my early twenties and I was hoping to buy a $96,000 condominium. I wasn't able to qualify for a loan but Wall Street lent me 50 million dollars on a business idea. It was amazing. As an engineer I became very intrigued with finance and how it is in life you can borrow big amounts of money for big ideas."

When California legislators set to work to create an energy exchange in the 1990s, Sprecher denounced their plan, which he argued was skewed to protect incumbents and disadvantage smaller operators like him. He hatched his own plan to trade electricity, trying to team up with a Swedish exchange called OM, now part of the Nasdaq OMX Group.

California legislators wanted to work with OM but leave Sprecher out of the equation. He allowed OM to run the California exchange in return for the Swedish firm introducing him to a small Atlanta business he bought from MidAmerican Energy in 2000. That became the foundation for InterContinentalExchange, which has outlived the California exchange and now trades California electricity contracts.