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What Does GAIN Capital Seek in an Acquisition Target?

GAIN Capital, the US financial services giant which owns retail Forex broker FOREX.com on Thursday reported a set of robust performance metrics for 2013, while boasting the successful acquisition of GFT. And, given that the GFT deal was the biggest so far for the group and, on top of that, was highly accretive, it comes as no surprise that the financial services giant will be looking at further transactions. In the conference call on the full-year earnings, GAIN's chief executive Glenn Stevens pledged more acquisitions in the coming months and shed some light on the characteristics of businesses that the group is targeting.
 
1. The business should help GAIN enlarge its product offering and geographical footprint – these are two aims that the group satisfied with the acquisition of GFT. Thanks to the deal, GAIN now has a lineup of more than 12,500 tradable products and its presence is increased in some key markets, like Continental Europe and Southeast Asia.
 
 
2. The business should complement either the retail OTC business, the institutional business, or the futures business of GAIN.
 
Some remarks are due here, as many of you may know that the group has been pursuing a strategy of beefing up its institutional business and aims to raise the share of non-retail revenues to 50% of the total in the longer term. In 2013, the institutional business accounted for 22% of those, so that's some good progress. But you must be wondering why the company is then aiming at businesses from the retail and futures sectors. Well, as Stevens put it, the strategy is not about replacement but about growth and diversification. And nobody may blame GAIN for aiming at a market that now lacks two of its biggest players – MF Global and Refco. 
 
 
3. The price of the business may be bigger than that of GFT, but it still should be within some limits. For that matter we should recall that GAIN recently tapped the capital markets with a convertible notes offering valued at $80 million.
 
 
The bottom line in the hunt process was stated explicitly by GAIN's chief executive: 
We do try to look for a strategic fit first and price second.
In the end of the day, that's what great business is all about – not simple third-grade arithmetic but rather strategical thinking and planning.
 
 

About GAIN Capital 

 
GAIN Capital Holdings, Inc. (NYSE:GCAP) is a global leader of online trading services provision. GAIN's technology offers market access and automated trade execution across multiple assets, including Forex, contracts for difference (CFDs) and exchange-based products, to both retail and institutional investors.
Through its retail brand, FOREX.com, GAIN provides retail traders across the globe with access to various OTC financial markets. FOREX.com supports clients from more than 140 countries, with its products and services available in many languages, including English, Arabic, Chinese, Japanese, and Russian.  
GAIN Capital and its affiliates boast offices in New York City; Bedminster, New Jersey; London; Sydney; Hong Kong; Tokyo; Singapore and Beijing.
TAGS: gain capital  gain capital forex  us forex broker  forex.com  m&a  acquisition  forex deals  retail forex  futures  institutional business  forex strategy  forex trading 

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