The broker's side of the story

Exclusive: FXPrimus Counters IPO "Block" Report, Reveals Firm's Financials

After reports came out that Australian regulators blocked the broker's IPO, an insider explained to Finance Magnates what really happened

Following a report in the Australian Financial Review saying that the national regulators had blocked FXPrimus’ attempt to take the company public, a source from within the brokerage reached out and explained to Finance Magnates FXPrimus’ side of the story.

According to our source, rather than the Australian Securities and Investments Commission (ASIC) outright blocking the process, FXPrimus chose to voluntarily withdrew from the IPO, even though it was over subscribed and fully underwritten.

The source did admit that the decision for taking this move was made is in light of the regulators position on forex trading and forex trading companies as exhibited by the statements made recently made by the Chairman of ASIC. As the authorities are evidently in the process of re-evaluating how they regulate the industry, and as Australia has not been an area of focus for FXPrimus’s business activities, its heads determined that the best course of action for them was to terminate the IPO process.

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This development can still be seen as a major setback for the broker as the IPO was meant to represent a culmination of three years work, organization, optimization and acquisitions by the board of directors and shareholders of the business. During this time period, a corporate reorganization has taken place that saw the previous holding company, Prime Mantle Corporation, moved and replaced with FXPrimus Group based in Australia.

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AUD $158.1 Million Capitalisation

In addition to the FXPrimus’ side of the story on the IPO freeze, Finance Magnates also had a chance to examine the company’s updated financial statements. The information in the IPO prospectus reveals that the total number of tradable accounts at the broker was 25,589 in 2014 with total client equity of AUD$43.3 million.

The firm’s key client locations as at 31 December 2014 as measured by tradable accounts were as follows: Malaysia 22%, Singapore 25%, China 20%, Thailand 5%, Indonesia 10%, with other locations 18%.

FXPrimus’ revenues (all figures in USD) reached $18.3 million in 2013, $27.2 million in 2014 (48.8% growth) and forecasted at $37.6 million for 2015 (38.2% growth). Gross profit reached $7.9 million in 2013, $13.9 million in 2014 and forecasted at $24.9 million for 2015. This brings the company’s gross profit margin to 43.3% in 2013, 50.9% in 2014 and 66.2% for 2015.

Following the completion of the IPO the indicative market capitalisation of the firm was to reach $158.1 million.

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