LMAX Gets Sold To Management, Valued at £3.6 Million

Following rumors reported earlier in the week, gambling company Betfair has announced that it is focusing on its core business

Following rumors reported earlier in the week, gambling company Betfair has announced that it is focusing on its core business and has sold a 67% stake through a Management Buyout (MBO) for £2.4 million. In their release, Betfair stated:

We will now operate under a new organisational structure based on the Exchange, Sportsbook and Gaming business units. Each unit will control, and have responsibility for, the design, build and sale of their respective products. This will help to drive a culture of increased ownership, resulting in faster and more efficient delivery.

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Betfair is a gambling company and we believe that the opportunities and challenges facing this business demand the focus of both management time and the company’s resources.

Accordingly, we have taken the decision to dispose of stakes in two non-gambling companies. We have entered an agreement to sell a majority stake in the LMAX financial exchange to a combination of management, led by current CEO David Mercer, and other private investors including Betfair co-founder, Edward Wray, for £2.4 million. The transaction is subject to FSA approval. The Tradefair financial spread betting business, which was previously part of the LMAX segment, will be retained as it is a cross-sell product for our existing customer base.

Commenting on the MBO, LMAX issued its own press release announcing details of the deal. According to LMAX, the exchange has experienced 7 consecutive quarters of growth and the company’s balance sheet remains strong.

LMAX Exchange Announcement of Management Buyout
LMAX Exchange (“the Company”), the first FSA regulated Multilateral Trading Facility (“MTF”) for FX and metals, announces today that it has successfully agreed a Management Buyout (“MBO”) transaction, subject to FSA approval.

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Highlights

  • Management of LMAX Exchange agree to buy majority stake from Betfair.
  • MBO backed by private investors including Betfair co-founder Ed Wray.
  • Betfair to retain a 33% stake in the Company.
  • Company has seen 7 quarters of consecutive growth, and over 20% monthly growth in trading volumes, revenues and client numbers since October 2011.
  • Balance sheet remains strong with a very healthy capital adequacy surplus.

The management team of LMAX Exchange led by CEO David Mercer, along with private investors including Betfair co-founder Ed Wray, has agreed to buy a majority stake in LMAX Exchange from Betfair.

The transaction is a positive milestone for LMAX Exchange, which is 16 months into a fully funded three year business plan. Since David Mercer took over as CEO in April 2011 the company has seen 7 quarters of consecutive growth. It has consistently outperformed its growth targets, delivering over 20% monthly growth in trading volumes, revenues and client numbers since October 2011.

LMAX Exchange retains a strong balance sheet. In compliance with FSA regulations, it continues to hold a healthy capital adequacy surplus, and holds all private client funds in segregated accounts.

Betfair will retain a 33% stake in LMAX Exchange. Betfair also retains Tradefair, the financial spread betting business, which is a cross-sell product for their existing customer base.

David Mercer, CEO of LMAX Exchange, commented:
“This is an exciting time for everybody involved with LMAX Exchange, including staff, clients and partners. From the perspective of our customers and MTF members it’s business as usual. We have demonstrated traction and an ability to perform to the business plan over the last 16 months and we look forward to continuing that momentum.
“LMAX Exchange has clearly benefited from being part of the Betfair group. However, our new status as an employee-owned company gives the business the required flexibility to rapidly grow and evolve. We have a clear strategy and roadmap to build LMAX Exchange into a leading FX venue globally in three to five years.”

Ed Wray, Betfair co-founder and LMAX Exchange shareholder, said:
“The LMAX Exchange business has great momentum. As a result, and as a long standing passionate advocate of the exchange model, I am very excited to be part of the team buying the business and look forward to it going from strength to strength in the next couple of years.”

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