This is probably one of the biggest news this year: Saxo Bank, one of the largest global forex brokers, has just acquired a 25% stake in Leverate, one of the largest MT4 and other forex software and integration providers. Details were not disclosed but my sources tell me that Saxo bought 25% of the company for $12.5 million which were probably part investment in the company and part payout to existing shareholders. This is no doubt a pretty steep valuation for a company making about $4-5 million in income a year (not sure on the Net bottom line). But this is also a strategic investment and acquisition of technology in the longer term.
Knowing how Saxo works (EuroInvestor portal two-step acquisition) I’m pretty sure Saxo inserted a clause which will allow it to take control/buy majority in the company upon achieving certain milestones.
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This of course brings out the very important question – what’s next for Leverate? After all Saxo is buying here a company which is currently providing services to dozens other competitors. Having a major broker owning a large portion of it shares will certainly have an affect on its day to day operations. Saxo tends to make strategic, not just financial, investments meaning that in the longer term Saxo would probably want Leverate to become its in-house MT4 servicing team. Saxo was in the lookout for a MT4 provider for a long time and has now decided not to just pay for outsourced MT4 service but actually buy a part of that provider. Leverate will certainly be the one to launch Saxo’s imminent MT4 offering.
For now this changes little for current Leverate’s clients however if Saxo indeed will increase its stake in Leverate this may pose some serious issues for Leverate’s existing clients – will they be happy to continue working with a company affiliated with a major competitor? Answer to this will be revealed in the longer term.
Saxo and Leverate declined to comment but will certainly issue a public statement in the coming days shedding more light on this acquisition.