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FXCM Sheds Light on Infinium Capital Acquisition

It was just a month ago that we reported of US Forex broker FXCM's change of heart regarding Infinium Capital – the Chicago-based high-speed trading firm. In the beginning of January 2014, the leading FX broker said that it will target the assets of the troubled firm, leaving behind the deal to acquire a $12 million note in the company – a move which, as you know, is essentially purchasing debt.

 

We had been curious to know more about the deal and we got fortunate yesterday at the 15th Annual Credit Suisse Financial Services Forum, as during FXCM's presentation at the event Drew Niv – the broker's chief executive officer, spoke of the acquisition of Infinium's assets.

 

Niv said that the deal with Infinium had two components – the legacy business and the infrastructure part. 

 

The Legacy Business

 

When FXCM had set its sights on Infinium, the company had many different trading desks with most of them loss-making – which is what Niv dubbed as the main reason for the Chicago-based firm going out of business. FXCM is keeping the five very successful teams of Infinium and they will form the so-called “legacy business”. It's expected to be profitable, but the earnings before interest, tax, depreciation and amortization (EBITDA) margin is set to be below that of Lucid Markets. The latter, as some of you may know, has delivered a very solid EBITDA margin (we are talking of 50%!) for FXCM, making the acquisition of Lucid one of the wisest and cash-generative deals in the Forex industry for the past couple of years.

 

 

The Infrastructure

 

FXCM's chief executive sees most benefits coming from the acquisition of Infinium's infrastructure – he reiterated that it's not only one of the best infrastructures for high-speed trading in the United States but also in the world. This is due to a great extent to the huge splashing of money on developing this infrastructure – a policy to which Infinium Capital has adhered over the past few years. The newly acquired infrastructure will be used by (guess whom?) Lucid Markets thus giving extra power to the strong earnings margins of the electronic trading firm.

 

 

We still have no financial details on the deal, but these will probably become clear once FXCM offers some financial statistics for the final quarter of 2013 and the beginning of 2014. By the way, although the company has made a move into the institutional segment, it does not seem to be giving  up on its plans to get that big deal in the retail Forex sector. During the presentation at the forum, FXCM's top management stressed that the cash balance of the broker is solid and allows for pursuing further acquisitions.

 

 

 

About FXCM Inc. 

 

FXCM Inc. (NYSE:FXCM) is a global online provider of foreign exchange, or FX, trading and related services to retail and institutional customers world-wide. At the heart of FXCM's client offering is No Dealing Desk FX trading. Clients benefit from FXCM's large network of forex liquidity providers enabling FXCM to offer competitive spreads on major currency pairs. Clients have the advantage of mobile trading, one-click order execution and trading from real-time charts. FXCM's U.K. subsidiary, Forex Capital Markets Limited, offers Contract for Difference ("CFD") products with no re-quote trading and allows clients to trade oil, gold, silver and stock indices along with FX on one platform. In addition, FXCM offers educational courses on FX trading and provides free news and market research through DailyFX.com.

 
TAGS: fxcm  fxcm forex broker  fxcm us  us forex broker  infinium capital  infinium chicago  infinium deal  forex deal  forex acquisition  m&a  forex m&a  infinium assets  high speed trading  infrastructure  drew niv   

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