The Asia-Pacific region is an area of extremely poignant interest to a great many FX firms, and in the case of New Zealand regulated FXPrimus, energy has been directed almost solely at garnering a client base within the Far Eastern markets. The success has led the broker to make plans to go public, as it posted about earlier in the year.
Following on those plans, the firm has initiated its filing process and has notified clients of its intentions to go public by announcing that it will make available 2,000,000 shares to its customer base. According to documents available to FXPrimus customers, and obtained by Forex Magnates, the shares are part of an overall 10 million share public sell, which the firm hopes to use to raise 10 million euros. Factoring 200 million additional shares that will continue to be held by the firm’s owners, estimated market cap of the company will be over 210 million euros.
The Bottom Line
The decision was taken by the founders of FXPrimus’ parent company, Primus Global Ventures, with cooperation from a series of business partners to attract potential investment by going public on a European stock exchange.
Among the reasons for this were considerations that floating the firm may provide additional recognition within the FX industry, provide opportunities for gaining additional funds in order to grow the business and enable an acquisition strategy that could be bolstered by share transactions.
Following an internal reorgnization in which the businesses within the group were optimized and consolidated under a newly established Irish registered holdings company during the course of this year, the company’s senior management agreed that it was ready to proceed with the IPO.
The ethos behind the consolidation and reorganization under a new holdings company was to enable sharing of client databases and other collaboratings, as well as facilitating the relative ease of adding new business units in new territories as time goes on, an example of this being the company’s pending regulatory licenses for PMC Options, a division specializing in binary options, as well as FXPrimus’ pending Financial Conduct Authority license which will allow the company to operate in Britain. In order that the company can proceed to offer its shares to public investors, FXPrimus has produced a set of financial revenue information, which contains the company’s comprehensive income statistics for three years which include 2010, 2011 and 2012.
The company’s increasing development of business in the APAC region has borne fruit, with revenue for the financial year ending December 31, 2010 having weighed in at $1,467,923, rising to $5,760,718 at the end of 2011, and a ten-fold increase to $10,696,915 as of December 31, 2012.
Profit increased from $798,815 at the end of 2010, through $3,376,149 in 2011, and last year saw the company profit by $5,601,331 before expenses.
With the increase in gross figures, expenses in developing the business did not create disproportionate expenses, with after-tax profit, and with all expenses taken into account, having risen from $604,434 in 2010, to $2,537,317 by the end of 2011, and arriving at $4,488,197 as of December 31, 2012.
As a result of this, the company finds itself in a strong financial position, with current assets standing at $33,331, 003 at the end of 2012, compared with $6,683,262 just two years prior.
Asian Tigers Represent The Lion’s Share Of Business
Markets that the company intends to focus its attention on within the region are China, Singapore,Indonesia, Taiwan, and outside of the APAC region South Africa is an important strategic territory.
FXPrimus established a representative office in Shanghai earlier this year, and at the time, PRIMEMantle Corporation, the firm’s parent company, indicated that it had planned to go to IPO in October this year, with a view to listing on the Frankfurt Stock Exchange in Germany.
Whilst an October IPO did not materialize, the company having produced the information memorandum in November instead, the decision to float the company’s shares on the Frankfurt Stock Exchange remains, with a total number of ordinary shares equating to 210 million, with a total cumulative value of 233 million Euros as a result of the consolidation of FXPrimus, PMC Options and FX:1 Academy under PRIMEMantle.
During the IPO process, the company is looking to place up to 10 million shares at an offer price of 1.11 Euro per share subsequent to fund raising by the firm in the advent of the public offering.
High Hopes For High Share Value
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According to the company’s memorandum, this amount has been justified as PMC Options has subsequently obtained independent valuations that demonstrate that the combined value of the group based on its forecast of financials to be in excess of this purchase consideration.
The purchase price has been paid by issuing the shareholders of the business with 200 million shares at the value of 1.17 Euro per share. Prior to the strategic condsolidation, FXPrimus was the only operational entity and was valued on a standalone basis at $79 million by BDO.
The 200 million shares issued to the founders will be subject to dematerialization based on the following milestones:
Upon listing, 30% of the holding will be free to trade.
After 12 months of service, an additional 20% will become free to trade.
After 24 months of service, an additional 20% will become free to trade.
After 48 months, the balance, equating to 30%, will become free to trade.
The company’s directors and key management have entered into a three year service contract which may only be terminated by the board of directors, ensuring that a retention of skills is maintained during the expected growth period subsequent to public offering.
Major Shareholders & Key Figures Set To Drive Aggressive Growth
As well as major shareholders being at an advantage from the outset, FXPrimus account holders with more than $1,000 in assets under management will be able to participate in the IPO, with 2 million ordinary shares being issued to clients.
The major shareholders at PRIMEMantle are made up of a series of trusts, with the indicative size of their holding after the private placement has been successfully subscribed for.
These entites are Blacktone Trust, which owns 50% pre-dilution, and 47.619% post- dilution, holding 10,000,000 shares. G2G Trust holds 9% pre-dilution, and 8.571% post- dilution, and 100,000,000 shares.
Tihower Trust holds 5% shares pre-dilution and 4.762% post-dilution, and 18,000,000 shares, whilst Ebene Trust holds 10% pre-dilution, 9.524% post-dilution, along with 10,000,000 shares, and SVS Trust holds 26% pre-dilution, and 24.762% post-dilution, along with 52,000,000 shares.
4.762%, 10,000,000 shares, are to be held by public shareholders.
FXPrimus has extremely high hopes for expansion and an aggressive stance toward growth post-IPO, with its forecasted gross profit expected to be a more than considerable 89,371,629.32 Euros after the fifth year, compared with 25,610,907.42 Euros in the first year.
Although the company expects overheads to increase eight-fold over a five year period, it anticipates that retained profit should amnount to 54,670,866.71 Euros after five years, compared with a much more modest 2,206,117 Euros in the first year.
The company has implemented a 30% dividend policy, payable annually from the inception. The first dividend will be declared after the financial year-end in December 2014, and paid annually thereafter.
Binary Options Cited To Achieve $25 Million Deposits
The company has great expectations for its binary options division, which is expected to generate 40% profitability on funds deposited by clients, and targeted to achieve $25 million in deposits by the end of this year. According to the company’s memorandum, this equates to a profit of $10 million, with an average deposit size of $1,000 per client.
Certainly, binary options trading in the Far East is extremely popular, and represents a segment which has a high potential profit which can be garnered from an eager and willing retail client base.
The company intends to release its shares for public investment on the Frankfurt Stock Exchange at an as yet unspecified date during 2014.