FXCM acquisition of Faros Trading – $15.6 million

$5 million cash paid up front, a further $10.6 million to be paid in 2015 in cash and/or FXCM stock.

So what is top-end Forex research worth? A lot, it turns out.

LeapRate has learned that FXCM’s previously-announced acquisition of Faros Trading cost FXCM $15.6 million — and that’s just for 50.1% of Faros. FXCM (NYSE:FXCM) does have an option to buy out the remaining interest of Faros, presumably at a roughly similar figure — meaning that the entire Faros was valued at about $31 million for the purposes of the sale.

Regarding FXCM’s right to buy out the remaining 49.9% of Faros, if the right is not exercised by FXCM by the end of 2017, the Faros minority owners have the right to market Faros for sale to others.

Faros is a leader in FX intelligence, market coverage, and execution services to the institutional foreign exchange market. As they put it, Faros helps clients make money by providing provocative, thoughtful, and value added research. Faros was founded and run by Goldman Sachs alum Ray Kamrath. Kamrath was formerly Managing Director and Global Head of FX Ecommerce at Goldman. Faros clients are mainly hedge funds, institutional money managers, corporations, and family offices.

The payment for Faros broke down as follows:

  • $5 million cash was paid up front at closing;
  • An additional payment to be made in 2015, which can vary based on Faros’ performance, and which can be paid at least in part in FXCM stock. that second payment is currently estimated at $10.6 million, making the entire deal (for 50.1% of Faros) worth $15.6 million.

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.

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