Update: more details on the deal are found here.
Couple of months ago I published that Gain Capital is about to acquire Interbank FX after several rounds of discussions with potential investors. In that round Gain remained as the last bidder. This deal however failed at the last moment for reasons not known to me – but not hard to guess that it was a disagreement over final price.
IBFX didn’t give up on trying to be sold and today finally succeeded – TradeStation (which itself was acquired by Japanese Monex Group few months back) just announced that it reached an acquisition agreement with IBFX.
IBFX is bought for mere $17 million – which is less than half Spectrum Equity invested in it back in July 2007. According to industry sources Spectrum invested $40 million in exchange for 25% of IBFX, however its stake almost doubled as IBFX failed to meet its income targets. Eventually at the time of this deal Todd Crossland held 59% and Spectrum 40%.
IBFX average volume is $1.2 billion a day, slightly lower than the Forex Magnates volumes survey estimate of $1.4 billion as published in the latest Forex Magnates Quarterly Industry Report. After the acquisition Monex Group’s forex volume is expected to be about $3.1 billion a day, with TradeStation accounting for $0.4 billion out of this figure (Forex Magnates estimate was $0.5 billion).
IBFX had 27,000 funded accounts and was losing money consistently since the end of 2009. It seems that this was a fire sale due to both pressure from Spectrum and IBFX’s inability to get back to profitability.
| FYE Dec-09 | FYE Dec-10 | FYE Dec 2011 (As of Sep. end, unaudited) | |
|---|---|---|---|
| Member’s equity | 46,936 | 39,477 | 36,608 |
| Total assets | 88,416 | 84,716 | 82,084 |
| Total revenues | 38,153 | 26,487 | 21,127 |
| Net income (loss) | 4,849 | (8,123) | (3,115) |
So what was the reason that they were losing money? It seems to me, if you can attract enough clients (which they did) there should be no reason for a retail FX-firm to not be profitable?