The stories that made the most impact in the online forex trading industry over the past week included two major acquisition agreements, the ongoing struggle of FXCM to get back on its feet and a new hedge fund with an unbelievable twist.
Tedi Sagi Buys Out Tedi Sagi
On Thursday it was announced that Playtech, the gaming software giant run by Tedi Sagi, is officially entering the forex market through its acquisition of TradeFX Limited in a deal worth up to €458 million for a controlling 91.1% stake.
TradeFX is the ownership entity behind the Markets.com brand and its underlying technology. Initially launched as GFC Markets and later rebranded to Markets.com, the group was backed by Tedi Sagi and was his main venture into the forex industry. Telesphere, a subsidiary of Sagi’s benefit trust, currently holds 86.45% of TradeFX.
Prior to this announcement, Markets.com has been considered to be an IPO candidate, similar to other Sagi backed assets such as Safecharge. The acquisition though, follows a separate model which Sagi has used which has been to back separate entities and eventually sell them to larger companies that he has an interest in, such as PT Turnkey Services in 2008, where Sagi earned €140 million at the time of the deal.
Only $244 Million Left to Go…
Also on Thursday, FXCM Inc (NYSE:FXCM) had announced it paid back an additional $54 million of its loan to Leucadia. The repayment means that the brokerage will avoid a contingent financing fee of $30 million.
The payment was partially funded with proceeds from the sale of FXCM Japan to Rakuten Inc. FXCM has now repaid $66 million under the credit agreement, and as of April 1, 2015, FXCM’s outstanding Leucadia loan balance is $244 million.
CEO Drew Niv commented: “We are ahead of plan and The results of the FXCM Japan sale exceeded our expectations. With all the increased attention to our other properties, we are expecting robust and competitive auctions for the other non-core assets we have targeted to sell.”
GAIN Capital Reaches New All Time High
In sharp contrast with its domestic competitor, GAIN Capital Holdings (NYSE:GAIN) has completed the acquisition of U.K. brokerage City Index. After the conclusion of the deal, the company stated that the combined size of client deposits now totalled more than $1.1 billion, which after the recent outflows of funds deposited with FXCM (NYSE:FXCM), made it bigger than its other U.S. listed counterpart.
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Annual trading volumes are expected to exceed $3 trillion. GAIN Capital Holdings’ (NYSE:GAIN) CEO Glenn Stevens commented in the announcement, “The closing of this transaction marks another major milestone in the growth of GAIN Capital and we are excited by the complementary strengths that have been brought together through this combination.”
“The scale, scope of products and geographies served and market leading technology provided by the combined company provides us with an excellent platform for continued growth and success,” Mr. Stevens concluded.
CWM FX’s Failed Route to FCA
Following up on the Heron Tower drama, sources close to the matter have confirmed to Forex Magnates’ reporters last week that GEMFX was approached by CWM FX in the latter part of 2014 and the companies reached the outlining of an acquisition agreement before GEMFX took steps to distance itself from CWM FX in the beginning of March.
However, as the news about the police raid on the Heron Tower became public knowledge, the target company has pulled back from any preliminary agreements.
According to the information obtained by Forex Magnates, there has been no tangible business relationship between the companies as GEMFX was going through the formalities of becoming a Financial Conduct Authority (FCA) authorized firm.
It Takes One to Hedge One
In a surprise move that caught the world’s senior banking level off guard, Thomas Jordan, the Swiss National Bank’s (SNB) powerful governor has resigned his role at the Central Bank and simultaneously announced the launch of a private fund named CHFHEDGE, we exclusively reported on April 1st.
The announced size of the fund is about $1 billion – which coincides with the loss sustained by the FX industry consequential to the unexpected removal of the CHF/EUR floor that sent the FX markets into turmoil in January.
While documented findings back this news report, it should be noted that some of the sources may have been motivated by business interests, personal animosity, or, more probably, a healthy knack for an April Fools’ hoax worthy of its name.