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Screenshot of a breaking news alert e-mail from Q2 2017
LeapRate Exclusive… LeapRate has learned via regulatory filings that FCA regulated broker ITI Capital Limited has posted a larger loss (than last year) of £5.0 million (USD $6.8 million), eating up more than all of the new capital which the company’s new ownership group put into the company during the year. (More on that below).
Revenues at ITI Capital did rise slightly from £948,000 in 2016 to £1.1 million last year, but the total Revenue figures are still fairly small given the amount of capital being poured into the business, and given the company’s level of client funds held. Client funds at ITI Capital were £44.9 million ($60.8 million) at the end of 2017, down from £69.7 million at the end of 2016. But it does seem as though most of those funds are dormant, with little trading activity taking place.
The company stated that its strategy for 2018 is to develop its retail client base through higher quality servicing, as well as building out institutional execution services to connect targeted clients in the region to a range of international markets. The company plans to also provide other services in the financing and structuring markets, where clients can obtain funding efficiencies and enhanced returns.
ITI Capital has made some changes and additions to its senior management team, following the company’s recent takeover (more on that below) and re-rebranding – first from FXCM Securities to Walbrook Capital Markets, and more recently to ITI Capital. We reported exclusively last week that ITI Capital had brought on board former Citi and Merrill Lynch executive Richard McCall as its new COO. Mr. McCall had worked with ITI’s new CEO Max Hayden at Merrill.
As we mention above, ITI Capital was originally known as FXCM Securities, the UK CFD arm of retail FX broker FXCM. FXCM sold the company in late 2015 to Latvian billionaire Igor Kim’s AS Expobank, as part of FXCM’s program to sell assets and businesses in order to repay its large loan from Leucadia.
Expobank renamed the company Walbrook and brought in a couple of new CEOs over its short tenure as owner, neither of whom was able to grow the business. Walbrook posted a £4 million loss in 2016 amid plunging revenues. Last at the helm as CEO under Expobank was Conor Ringland, who was previously Head of the UK for Denmark-based Saxo Bank from 2007-2014, had also worked at E*TRADE Financial Corp (NASDAQ:ETFC) and most recently was Head of Financial Markets – Digital at Lloyds Bank.
Expobank then turned around and sold Walbrook last year to ITI Group, a Russian focused brokerage, which received backing for the deal from Russian venture investment firm Da Vinci Capital. The company was re-renamed ITI Capital, and ITI brought in Instinet and Liquidnet veteran John Barker as the new Chairman of the company, and Max Hayden as CEO, as part of its plans to strategically build out a significant prime brokerage business for the institutional and high net worth community.
As part of the ITI takeover the new shareholders injected £4 million of new capital into the company, but as we note above that alone doesn’t cover the 2017 loss of £5 million. ITI’s equity base, even with the new capital injection, fell from £2.4 million at the end of 2016 to £1.4 million by the end of 2017. The new shareholders indicated in the filing that they intend to support the business financially for the foreseeable future.