The name GTX has been associated for years with parent GAIN Capital Holdings Inc (NYSE:GCAP). And so the news late last month of GTX being sold for $100 million to Deutsche Boerse AG’s 360T unit came of something of a surprise to many in the FX world – especially as GTX just announced its best-ever month for trading volumes in May 2018.
Why did GAIN Capital decided to sell now?
How did the deal come together?
We’re pleased to speak today with GAIN Capital CEO Glenn Stevens. Here is what he had to say.
LR: Hi Glenn, and thanks so much for joining us today. GAIN Capital has been in both the Retail and Institutional sides of the FX brokerage business for a long time, so its exiting Institutional seems to be a ‘big deal’. Any thoughts on the matter?
Glenn: We had successfully grown our institutional business over the last eight years and had an opportunity to receive an attractive $100M valuation for the business and create significant shareholder value through a sale.
LR: Was this more about you deciding to focus your resources on the Retail side of the business, or just an opportunistic chance to monetize Institutional?
Glenn: Beyond the ability to monetize a valuable asset, this transaction aligned with our strategic focus on growing our retail business, which has remained the primary driver of GAIN financial results, consistently delivering more than three-quarters of our revenue and earnings on an annual basis. A portion of the proceeds from the sale will be used to invest in organic initiatives to drive future growth in our retail business.
LR: Can you let us know a little more about how the deal came together with Deutsche Börse and 360T. Did things move quickly, or was this a long time in the works?
Glenn: We engaged Jefferies to run a process and, from that process, received multiple bids for the GTX business from both financial and strategic buyers. GTX was a natural fit for Deutsche Borse, as it complements 360T’s existing product suite by adding access to deep FX spot liquidity supported by professional financial institutions.
We were very familiar with Deutsche Börse Group’s FX unit, 360T, given the firm’s strong expertise in the FX space. 360T is an ideal partner for the transaction with its complementary product set, and their ability to enable a seamless transition for GTX clients.
LR: So now with all this capital freed up, where do see the opportunities for GAIN Capital? Specifically, do you see consolidation opportunities in the Retail FX sector in light of ESMA’s new leverage restrictions, Google’s ad restrictions, etc.?
Glenn: We are very bullish on the opportunity in retail, and laser-focused on growing the business. We’re making significant investments in our products and services as well as our talent, with key hires being made across multiple areas of the business. As far as the impact of regulatory changes on our business, our global regulatory footprint is a key advantage for us. We are licensed in eight jurisdictions globally, which is possibly the widest regulatory footprint of any retail FX/CFD broker, with a well-balanced geographic distribution of customers and revenue.
As we’ve said many times, we believe that the introduction of new rules and regulations in the industry will lead to further consolidation, and with our strong global brands, financial resources and focus firmly deployed on this space, we feel we are in a strong position for future growth.