High-value M&A hopes of deliverable FX firms curtailed as OzForex cuts talks with HiFX

After a $439 million IPO last year, deliverable FX firm OzForex sought acquisition of British HiFX. Firm now states that this is very unlikely to proceed

Deliverable FX had often been regarded as somewhat of a secondary business to that of the highly profitable electronic trading of foreign currencies via retail brokerages, until last year’s announcement by Australian deliverable FX firm OzForex that it planned an initial public offering at a somewhat eye-watering value.

At that particular time, a series of mergers and acquisitions between high-profile FX firms and their peers as per that of MIG Bank and Swissquote in the latter part of last year, as well as high-value IPOs among CFD brokers such as Plus500, the astronomical $439 million IPO by OzForex served to highlight the profitability of the deliverable FX industry and spur the company into investigating mergers and aquisitions of similar companies.

One such company was HiFX, a British deliverable FX company, with regard to which OzForex had announced on February 10 this year that it had initiated discussion regarding acquiring the firm.

Despite the numerous bold steps by firms to IPO and acquire others, often with successful results last year, OzForex has now placed a publicly available notice on its website which is dated February 18, and has recently made available, that its intention to purchase HiFX is very unlikely to proceed.

As economies of scale have been achieved in the retail FX industry with purchases which range from FXCM’s interest in Faros Trading, as well as OzForex’s compatriot Pepperstone citing the IPO of the deliverable FX firm as a yardstick by which to value the high potential profitability of acquiring Australian FX companies for overseas suitors.

Whether this signals a decrement in interest within companies to further their business via acquisition, or whether the deliverable FX business does not represent such an attractive proposition for investors wishing to gain market share in other regions compared to the necessity to do so often prioritized by retail FX brokers and technology firms is unclear, but most certainly worthy of discussion.

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


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