IG Group buys Forex research site DailyFX from FXCM Inc for $40 million


Well it looks as if FXCM still does have some salable assets.

IG GroupContinuing its parade of asset sales in order to repay its high-interest loan from Leucadia National Corp (NYSE:LUK), retail forex broker FXCM Inc (NASDAQ:FXCM) has sold its very popular research, education and market news website DailyFX to UK online trading giant IG Group Holdings plc (LON:IGG) for $40 million. Cash of $36 million will be paid to FXCM on closing, with the additional $4 million to be paid on completion of certain migration requirements.

DailyFX is a very popular website among both retail and institutional traders. According to SimilarWeb, Daily FX gets about 4.2 million unique visits per month.

FXCM still owes Leucadia about $193 million (as of June 30) from its initial $300 million loan taken in January 2015, which helped FXCM stay afloat after the surprise Swiss Franc spike of January 15, 2015, which saw FXCM take a $276 million hit. So, the $40 million from the sale of DailyFX will go a long way toward paying down the loan. According to FXCM, after using the net proceeds from the DailyFX sale there will be about $153 million outstanding on the Leucadia loan.

The DailyFX websites currently support eight languages: English, French, German, Italian, Spanish, Greek, Arabic and Chinese, with the client recruitment centered in related geographic regions. IG will take on 34 employees associated with DailyFX, as well as ownership of all of the assets associated with delivering the full service to current and potential clients, including journalistic and support staff, subscription lists, source code, all relevant domain names and all intellectual property rights.

For an agreed annual fee, FXCM will continue to advertise on the US site and will take ownership of any US and Canadian domiciled leads that this advertising generates. According to SimilarWeb data, DailyFX gets about 20% of its hits from US visitors and another 6% from Canada, so that is still a fairly big chunk of DailyFX’s business and value.

IG expects that running DailyFX will add around £5 million to annual operating costs.

Peter Hetherington, IG
Peter Hetherington, IG

Peter Hetherington, CEO of IG said:

We are extremely pleased to have had the opportunity to purchase what we consider to be the leading global client recruitment resource in the FX environment, an asset type where IG is very strong, but historically underweight. This brings to IG an exceptional proven platform for both acquiring new clients and further engaging our entire current global client base, along with a number of very talented people. This transaction further underpins our commitment to continuing to provide the best client experience in our industry.

FXCM CEO Drew Niv said of the DailyFX sale:

While DailyFX is a high quality asset and was not a targeted asset to sell, the opportunity came along and it was something we felt we should take advantage of. At this time, we do not plan on selling any other retail FX assets and believe the remaining assets held for sale satisfy the remaining debt outstanding to Leucadia.

 

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  • JLTrader

    Don’t know how they came up with the $40M valuation, but it sounds to me that IG massively over-payed. Add to that £5M yearly operating costs. Money to burn…

  • Parapara

    LP published this 24 hrs ago and the idiot at financefeeds claims its exclusivity….

  • William

    Hard to know if they overpaid or not @jltrader:disqus, without seeing more metrics such as leads created, new accounts created…. But it does demonstrate that new client acquisition has become very expensive in FX, especially in choice markets like the UK. DailyFX’s value is entirely about new client acquisition.

  • James R.

    smart move by IG. (not sure about the price tho, just like @jltrader:disqus). there aren’t too many fx properties like DailyFX which a broker can own, and still bring in lots of new clients each month. Brokers pay a ton each and every month to website like investing.com, forexfactory… If this can replace a lot of that spend then its a great buy.

    • JLTrader

      Look at how much ForexFactory advertising would cost, much less than £1M/year. With what’s left of the £5M/year operating costs, they could pay to be plastered all over the internet on big traffic sites, and still have enough left to build up their own research/calendar portal. So why pay $40M to begin with? I don’t get it.

      • sgleahy

        In the Finance Feeds article they note IG is planning a 10 year amortization for the $40 mio cash. So for accrual/accounting purposes, its going to cost them $9 mio per year to run ($5mio operating + $4 mio amortized). Without the internal metrics of leads generated and revs/client from IG we can not do a full analysis, but the overall spend does seems reasonable. Assume a $1,000 onboarding costs per acct (I recall Plus500 at approx $1,200 at one point). If the only “value” from DailyFX is new clients, then IG needs to add just 9,000 active accounts per year via the DailyFx marketing channel to break even. That is 750 accounts per month which is well within expectations.

        PS – What I do not get is…..what websites/portals really have a 10 year shelf life? And DaliyFX has already been around for 5 years or so. It will involve a lot of work to keep the website relevant for another 10 years.

        • James R.

          You both make good points @jltrader:disqus and @sgleahy:disqus. I think there’s a lot more to it tho. They’re probably going to cut a lot of ad spend elsewhere and funnel it to DailyFX, so this isn’t necessarily incremental spend.

          And there’s a lot of value in owning the platform – getting client emails when they sign up for the DailyFX newsletters, direct contact with clients. You just don’t get that when you spend on other third party websites, no matter how many clients they deliver per $ spent.

        • Adil Siddiqui

          good point, they might be expanding the content and tools that users will have access to

  • Joe

    Waste of money if you ask me. Smart traders who read this stuff don’t trade with IG anyway. IG is the preferred broker for mug punters not savvy traders.

  • James R.

    Another way to look at this is, how much advertising could Dailyfx sell if they were independent and allowed other brokers to place ads. If Dailyfx were run as an independent business it’d easily be worth $40mln

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IG Group buys Forex research site DailyFX from FXCM Inc for $40 million

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