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FXPrimus IPO Valuing the Broker at AU$225 Mln Challenged by ASIC Report

Australian newspaper has dispelled the prospects for an IPO by forex broker FXPrimus due to the regulator protecting its authority

Australian media reports are suggesting that an IPO by foreign exchange brokerage FXPrimus is facing unforeseen challenges. The Australian Financial Review published an article revealing that the Australian Securities and Investments Commission (ASIC) has temporarily blocked the Initial Public Offering (IPO) of FXPrimus.

According to information exclusively obtained by Finance Magnates, the company’s clients are focused in the region with Indonesia, Malaysia, Singapore and China being core markets. FXPrimus was aiming to reach a valuation of AUD$ 225 million ($182 million) after the float and issue AUD$ 25 million of new shares with a price set at AUD$ 1, while floating 100 mln existing shares.

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Revenues of FXPrimus have been growing steadily for the past couple of years forecasted at AUD$ 23.2 million for 2014

The revenues of the company have been growing steadily for the past couple of years forecasted at AUD$ 23.2 million ($18.8 million) in 2014 with the bottom line profit before tax forecasted at $10.3 million. That said the performance has spiked higher in September 2014 when market volatility got unlocked.

The information in the IPO prospectus which was seen by Finance Magnates’ reporters reveals that the major shareholders in FXPrimus include major investing holdings such as Blackstone Trust (almost 50%), SVS Trust, Ebene Global Capital Trust, Tihower Trust and G2G Global Trust.

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The company expected to use newly-raised funds in order to obtain an AU$ 7 million ($5.67 million) war chest for acquisitions, AU$ 5 million ($4 million) for new licenses and cover the expenses related to the IPO process.

Client equity reached about $50 million in October 2014

Client equity reached about $50 million in October 2014 when the documents related to the IPO process were filed. New accounts totaled close to 1400 monthly.

The regulator has identified a worrying trend in Australia and has already voiced its concerns in public statements. ASIC stated on numerous occasions that the protection it offers only concerns Australian citizens and in recent months a number of firms have been using the name of the regulator in order to promote its services in the region.

When Southeast Asian traders were looking for a reliable counterparty they accepted the Australian regulatory regime as a reliable source of stability. ASIC’s powers are solely sweeping for clients who are located in Australia and the regulator has recently been taking actions to make sure that companies are not marketing its name abroad.

A spokesperson for the regulator shared with the Australian Financial Review that ASIC had been concerned with the above mentioned trends in the foreign exchange market and an interim stop order was placed on the FX Primus Group Limited’s prospectus on April 30, 2015.

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