Playtech has been making big headlines across the institutional foreign exchange space during the past year. After last November’s announcement of the acquisition of CFH, this year the firm is further expanding and rebranding its financials division. Yesterday the company announced the acquisition of Alpha for up to $150 million.
Playtech further committed to developing its financials division and rebranded it to TradeTech. The unit includes four major components. CFH and TradeTech Alpha make up the B2B part of business, while Markets.com and the newly established ProMarkets brand, which deals with high net worth individuals, will focus on B2C.
The senior executives on both sides of the latest deal for Playtech, TradeTech CEO Ron Hoffman and Alpha CEO Muhammad Rasoul, have kindly agreed to an interview with Finance Magnates.
Finance Magnates: Alpha has been around for only a couple of years. What was the key asset that attracted you to the company?
Ron Hoffman: While Alpha has been around for only a short while, Alpha’s management team and key executives have been around in the industry for many years, from its inception really. The success that Alpha has managed to achieve in such a short period of time only strengthens the point about the quality of people and knowledge embedded in that business. We are specifically excited about the risk management capabilities and their proprietary technology which we believe is unique in our space.
FM: How important is it to have a market making arm in the institutional business nowadays?
RH: I believe it is important to have a variety of capabilities in order to capture opportunities in our space. What might be relevant for one opportunity may not be relevant to another, the key is to have the capabilities.
FM: Will the B2C business of Playtech be affected by the deal in any way?
RH: Part of the value that we’ll enjoy from this transaction is to enhance our risk management capabilities for the group as a whole which naturally includes our own B2C businesses Markets.com and ProMarkets.
FM: Did you expect such an offer within only a year and a half since starting as CEO?
Muhammad Rasoul: No, but I don’t think that way in general. I try to focus on the ‘now’, and our focus factor on current strategy determined by the board for the midterm, that’s always been my way. What I have learned over the years is that it is too hard to predict things in this space.
We make effort according to our strategy and then react to the unknowns. While we game plan for what ‘could/might’ happen we always try to keep the focus on the ‘now’. Having an opportunity like this I would not have imagined would have happened in such a short time. We are very excited about what Ron and his team are looking to create with TradeTech and we feel we can help bring his vision to fruition.
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FM: Did you plan to join a company with a bigger balance sheet all along, or did it come to mind only after Playtech stepped in?
MR: Strategically we never have one plan. In our game planning for what would work strategically, finding a good strategic partner was always on the board, but there were other options just as valid. I do however think that Playtech represents more than just balance sheet.
If you look at their technology for B2B customers around CRM, website analytics, onboarding, funding, etc. its top notch. There is a lot that we can do in helping to distribute and mature this technology in the future.
FM: Will you retain an active role as the company becomes part of Tradetech?
MR: Yes. I will serve on TradeTech Alpha’s board as a Director. I will also be working strategically inside of the TradeTech Group working on group strategy.
FM: Which of Alpha’s assets weren’t included in the deal, and what will happen to them now?
MR: The transaction relates to a mix of technology, risk management and trading intellectual property, staff, and the rights to most our professional customer assets. The customers of ACM Group now that take liquidity from us will move, over time, to the new Tradetech Alpha subsidiary of Playtech.
ACM Group will then primarily focus on IB business from emerging markets. Each of our customers has a very close relationship with Alpha so this process will be very smooth and as always, we will discuss and agree with each customer based around what they need and long term what is the best option for their long-term business success.
FM: What are the main synergies between Alpha and CFH?
RH: This transaction is about empowering TradeTech with technology, risk management and dealing capabilities. We see this as valuable for the group as a whole. As we become bigger in size with more customers on both liquidity and services, this becomes a more important role altogether for us in order to maximize the opportunity.
FM: Low volatility has been a challenge for several companies until recently. Is the diversification of market making and STP key to handling such periods?
RH: Absolutely, as I mentioned before, the key is about having a variety of capabilities. What’s relevant for one part of the business may not be relevant to the other. In times of volatility, Alpha’s knowledge and capabilities becomes more valuable than ever, and during quiet times, it’s about sustainability and focusing growth on the core business KPIs.
FM: Will Tradetech offer cryptocurrency liquidity? If so, how?
RH: This is something we are evaluating and testing as we speak. In principle, we are looking to do so as it becomes an important milestone and not many can be in a position to offer that in the space. TradeTech whether through CFH, or TradeTech Alpha would be the best venue for that liquidity given our size, position and offering. So we do see that as an important evolution for us.