The institutional business unit of GAIN Capital, foreign exchange electronic communications network (ECN) GTX has been sold to Deutsche Borse’s 360T. The move marks a continued expansion on part of the German company’s business in the FX space and marks the continuation of the move of institutional level FX trading businesses to exchanges.
The move comes about a year after Deutsche Borse’s 360T launched an FX ECN of its own. Major exchanges around the globe have been venturing deeper into foreign exchange for years now after BATS acquired Hotspot in 2015 and Euronext took over Fastmatch last May. 360T itself got acquired by Deutsche Borse in 2015.
Glenn Stevens: The Sale Provides Additional Financial Flexibility
Commenting on the deal, the CEO of GAIN Capital Glenn Stevens said: “We have taken this strategic step in order to focus our attention and resources on our core retail business and on using available levers to unlock shareholder value.”
“Proceeds from the sale of GTX provide us with additional financial flexibility to invest in organic growth and M&A opportunities, while providing increased liquidity to accelerate return on capital, which may include increasing the scale of our stock repurchase program and reducing our debt. We are pleased to be able to partner on this transaction with Deutsche Börse Group’s FX unit, 360T, a leading global FX venue,” Stevens explained.
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GAIN Capital expects to net $85 million from the transaction, which is expected to close in the second quarter of the year. According to the official announcement, about eight years after launch, the GTX ECN has over 150 unique clients, which include banks, brokers, hedge funds, non-bank market makers, commodities trading advisors, asset managers and retail aggregators.
As of 2017, the unit had 700 unique users netting to GAIN about 10% of the Company’s total revenue and 14 percent of its EBITDA.
Commenting on the news, the CEO of GTX, Vincent Sangiovanni, said: “Deutsche Börse Group’s FX unit, 360T is an ideal partner for the next phase of GTX’s growth with its broad geographic distribution, complementary product set and deep knowledge of the FX space. We look forward to working closely with 360T to continue to deliver our clients with GTX’s innovative trading platform and high-quality customer service.”
The Head of FX Deutsche Börse Group and CEO of 360T, Carlo Kölzer, elaborated: “The highly reputable player in the FX market is a meaningful addition not only to broaden our existing offering but also to complete our holistic value proposition designed to support all clients that operate out of all geographies and client segments based on current or potential future market structure.”
The parties in the transaction used the services of Jefferies LLC as an exclusive financial advisor while Davis Polk & Wardwell LLP served as legal advisor to GAIN Capital.