NAGA Group AG, a financial technology company providing trading and investing apps, has announced a merger agreement with Capex.com, a multi-asset online trading platform. According to the official statement, Capex.com's Founder and CEO, Octavian Patrascu, will become the new CEO of publicly-listed NAGA.

NAGA and Capex.com Merge

Capex.com will reverse merge into NAGA Group AG through a non-cash capital increase as part of the agreement. Additionally, Patrascu will make a personal cash injection of $9 million into NAGA via a convertible bond.

The strategic move aims to create a profitable fintech entity by combining both companies' user bases and strengths. Together, NAGA and Capex.com currently have over 1.5 million users globally and are projecting over $250 million in revenue over the next three years. Last week, the financial results for the German fintech for H1 2023 were released, revealing better-than-expected performance. The company earned €25.2 million, almost €5 million more than the figures announced in July.

The joint company is estimated to generate close to $90 million in revenue in 2023 with EBITDA of $6 million. It will also see immediate cost synergies of more than $10 million per year in areas like regulatory, technology, and marketing expenses.

"In terms of strategic synergies, the combined entity will have a much bigger footprint regarding users, licenses, and technology, which will lead to scaling the business in the medium term as well as the long term," Michael Miloans, the CEO of NAGA, stated.

Naga's (XETR: N4G) stock prices reacted to the acquisition news on the German trading floor. During Tuesday's session, they are up by 6.6% and cost €1.1.

As part of the agreement, Patrascu will become the new Group CEO of NAGA. The companies are targeting completion of the merger in Q2 2024, subject to customary approvals and conditions.

"NAGA and Capex.com have a multitude of synergies and that is why I am confidently investing my own money in this transaction," Patrascu, the incoming Group CEO of the combined entities, added.

For Capex.com, this is another acquisition move this year, following the July takeover of WiredMarket's client book to enter the Greek market.

Capex.com's Investment of $15 Million

The merged company projects significant growth in users, revenue and profits. Together, NAGA and Capex.com estimate they will generate $90 million in revenue this year with $6.5 million in EBITDA. Their combined trading volume is expected to reach around $300 billion in 2023.

With a collective user base exceeding 1.5 million customers across over 100 countries, the joint platform aims to expand its reach to 5 million users by 2025 rapidly. The union grants the ability to operate in over 50 countries thanks to a total of 8 licenses. This includes entry into fast-growing markets like MENA, where NAGA can launch its social trading tools.

As part of the agreement, Capex and its shareholders will invest $15 million into the combined business. This further bolsters NAGA's capital position and liquidity, with an extension of a $5 million loan repayment to 2025. The completion of the transaction is subject to the usual closing conditions, in particular, regulatory approval.

The story is developing and will be updated shortly.