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Screenshot of a breaking news alert e-mail from Q2 2017
LeapRate was first to break the story on Thursday of Australian retail forex broker Pepperstone securing a multi-million dollar investment, which was then copied on several other blogs. We’re now pleased to bring our readers another first, in the form of an exclusive interview on the investment with Pepperstone CEO Owen Kerr.
The investment in Melbourne-based Pepperstone was made by CHAMP Private Equity, one of Australia’s leading PE firms.
Before we get to Kerr’s remarks, we’d note that neither Pepperstone nor CHAMP have indicated the size of the investment, or the percentage of the company now owned by CHAMP. Australia press reports speculated that the deal was done in the $100-$200 million valuation range, and had actually mentioned rumors in recent weeks that Pepperstone was going to be sold to CHAMP.
Our sense, based on what was and was not said, is that this is a significant minority (i.e. non-controlling) investment being made by CHAMP, possibly with option rights to increase their stake to a majority (i.e. controlling) interest in the future.
In any event, both CHAMP and the existing ownership and management group seem intent on growing Pepperstone into a major player in the global FX scene.
LR: Hi Owen, and congratulations on bringing CHAMP Private Equity on board as an investor in Pepperstone, we understand that they are one of the leading investment firms in Australia. Can you let us know a little more about how the investment came about?
Owen: CHAMP approached us toward the start of 2015 as they had been looking at leaders in the Online Brokerage sector after seeing its increasing growth in Australia and throughout Asia. We were aware that CHAMP had a long history in the Australian investment market, dating back to 1987 and they currently have over $2 billion in funds under management.
They have a great track record when it comes to assisting growth businesses reach substantial scale and with prior portfolio digital investments like Australia’s Seek.com it was a natural fit.
LR: You’ve been open in the past about pursuing an IPO and taking Pepperstone public. Is this an idea which has now been shelved, or does the CHAMP investment possibly accelerate the IPO timeline?
Owen: I think the investment from CHAMP gives us a large platform for growth and enable us to a scale the business faster, we are now actively seeking acquisitions and we have had numerous inbound inquiries since the deal was announced.
If anything I would feel this would accelerate our timeline to IPO in the future.
LR: Some reports in the Australian press called this a ‘takeover’ or ‘sale’ of Pepperstone. Can you give us and our readers some more details on the transaction? Is this a minority investment by CHAMP? Or do they effectively control the company? Can you say anything more about the size of the investment made, or Pepperstone’s valuation in the deal?
Owen: I can’t really disclose the mechanics of the deal, however there are no changes in management or staffing and it is business as usual.
LR: Operationally, how and where do you see Pepperstone expanding with the cash you’ve raised? What are the major changes we can expect to see at Pepperstone over the next 12 months?
Owen: Watch this space – We will have an announcement in the next week surrounding our expansion into Europe.
We will also be launching exciting new products for our client base to actively compete with our listed peers, CMC Markets and IG Group. According to the latest Investment trends survey we have doubled our Market Share in Australia in the last 12 months and have the highest client satisfaction ratings of any broker in the market, so we aim to continue that trend.