LeapRate Exclusive! M&A Deal Report – LeapRate has learned that Finotec Group Inc. subsidiary Finotec Trading UK Limited has agreed to sell certain retail clients and client assets outside the EU to AvaFX. As in other such transactions, such as the recent purchase of dbFX by Gain Capital, the Finotec clients need to agree to move their accounts to AvaFX
AvaFX – a member of LeapRate’s list of Approved Forex Firms – is one of the successful new generation of Forex firms which have based themselves on a combination of superior customer service and aggressive online marketing. AvaFX has also grown via a series of acquisitions, including the March 2011 purchase of eForex’s client assets, the July 2010 acquisition of Art Co. of Japan (where AvaFX recently was awarded a full Forex license), plus the most recent Finotec deal. (For a list of Forex sector M&A and financing transactions from 2005 to present see LeapRate’s Forex Industry Report).
Unlike several other recent Forex M&A transactions involving sales of client assets, we believe that this transaction was not driven by regulatory considerations. Instead, the sale was part of Finotec’s strategy of focusing on other retail markets and the institutional market, where it has built up by our estimation to about $20-25 billion in volume per month, using a Currenex platform and offering straight-through-processing execution. Finotec was one of the early pioneers in the online Forex sector, launched back in 2001 based on its own proprietary platform. Finotec (i.e. the parent company, Finotec Group Inc.) is publicly traded in the US (OTCBB: FTGI). Its main two operating subsidiaries are Finotec Trading (Finotec Trading UK Limited is authorized and regulated by the FSA in the United Kingdom), and Finologic Ltd., involved in software development and related services in the online Forex sector – essentially marketing the Finotec platform to others who want to launch their own Forex brokerage or affiliate.