FXall postpones planned IPO

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FXall offering likely postponed until Q1-2012 at the earliest.

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Sources on Wall Street have informed LeapRate that the FXall IPO has been postponed until early next year at best, if not later. FXall (or formally, FX Alliance Inc.) first filed to go public with the U.S. Securities and Exchange Commission ("SEC") on September 19, refiling its registration statement with amendments on October 28 - apparently hoping to go public before the end of the year. Since then, radio silence. The postponement can likely be attributed to several factors, both Forex-related and market-related:

Poor overall IPO Market - 2011 IPOs have fared poorly in the market, down on average about 11% (according to data from IPOscoop.com).

"Star" IPOs performing badly - More important than "overall" IPO performance, some of the high-profile IPOs this year, particularly in the tech and online areas, are well down from their initial prices and/or from their post-IPO highs. In particular, these bellwether IPOs which can set the mood for future IPOs include:

2011 IPOs

FXCM and Gain Capital (Forex.com) - FXCM and Gain, which both went public last December, have continued to trade poorly, well down from their IPO prices (FXCM by 28%, Gain by 26%). More troubling seems to be the fact that both FXCM and Gain seem to have performed well in the "real" world, delivering in our view solid financial and operating results, introducing regular dividends to their shareholders, making acquisitions which seem to make sense..... but for some reason Wall Street just doesn't seem to "get" these companies. Although FXall has a somewhat different business and business model than FXCM and Gain, the fact that Wall Street and the investment community have not warmly embraced FXCM or Gain does not bode well for FXall and its pending Wall Street debut. (Note that we believe that eventually equity investors and Wall Street equity analysts will get behind FXCM and Gain, and possibly others, assuming that these firms continue to show strong operating results, and continue to grow internationally, as they have been).

Were Wall Street to look to FXCM and Gain multiples in valuing FXall, they would likely come to a much lower total valuation (i.e. in the $100-200 million range, based on 8-11x trailing P/E, 0.7-1.2x Revenues, 3-4x EBITDA) than what they are likely looking for.

For more details and lists of Forex financings and M&A transactions, and up-to-date publicly traded and M&A valuation multiples for Forex companies, see the LeapRate-Dow Jones Forex Industry Report for 2011.

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Guest Thursday, 24 April 2014

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