CFD broker Plus500 is planning to raise $50 million at a company value of $225 million in an IPO on London’s Alternative Investment Market (AIM).

BREAKING NEWS…. UK-based and Cyprus-domiciled CFD broker Plus500 has formally announced its intention to pursue an IPO on the London Stock Exchange’s Alternative Investment Market (AIM). The company plans to raise about $50 million in an offering which would value Plus500 at about $225 million (after the money).

Other nuggets of information from Plus500’s press release include:

• In 2012, Plus500 had revenues of $56 million, and profit before tax of $23 million.
• In the first quarter of 2013, Plus500 had revenues of $19.8 million, and profit before tax of $7.0 million.
• Roughly 90% of Plus500’s revenues come from Europe, with the UK alone accounting for 40% of revenues.
• At year end (2012) Plus500 had 58,000 active customers.
• Plus500 only has about 50 employees.
• Liberum Capital Limited is acting as Nominated Adviser and Broker for the IPO

Plus500 is certainly not a shy firm. As we reported back in April, they were the first retail Forex broker to offer leveraged Bitcoin trading. They also received a fairly sizable (£205,000) fine by the UK’s FSA last October, for failing to provide accurate and timely transaction reports to the FSA regarding certain trades in the 2010-11 time period. The fine was actually reduced by 30%, from nearly £300,000, as Plus500 agreed to settle at an early stage of the FSA’s investigation.

If successful, this would represent the first IPO of a retail forex broker since FXCM and Gain Capital (Forex.com) both went public just over two and a half years ago, in December 2010. As we wrote several weeks ago, with the shares of retail forex brokers such as FXCM, Gain, and IG Group at or near multi-year (or all-time) highs, we expect other forex brokers to look at taking advantage of the positive sentiment in the public markets right now and look at going public.

We will continue to follow this story closely, and to bring you more information and analysis as it becomes available.

The full text of the Plus500 statement follows:

Plus500 Ltd: Intention to IPO and Seek Admission to AIM

LONDON — (BUSINESSWIRE) — Plus500, which has developed and operates an online trading platform for retail customers to trade CFDs (Contracts for Difference) in over 50 countries, announces today its intention to launch an initial public offering (“the Offer” or “IPO”) and seek admission of its ordinary shares to trading on AIM, a market operated by the London Stock Exchange. The Offer will seek to raise gross proceeds of up to US$50 million via a placing of new and existing ordinary shares (“the Placing”). Liberum Capital Limited is acting as Nominated Adviser and Broker.

Plus500 has developed and operates an online trading platform (www.plus500.com) for retail customers to trade CFDs internationally over more than 1,700 different underlying global financial instruments comprising equities, ETFs (Exchange-Traded Funds), foreign exchange, indices and commodities.

Highlights include:

Scalable Business Model

• The Directors believe that the success of the Group to date has been primarily due to the self-developed, proprietary technology it has developed and continues to develop to support the Trading Platform. The Trading Platform provides a simple and consistent interface for customers across a number of different devices. It has been designed to be as intuitive and easy to use as possible and is able to provide customers with real-time prices, execution facilities and a multitude of order types.
• In addition, the Directors believe that the Group’s business model is scalable as a result of the level of automation in the Trading Platform and that there is significant scope for the Trading Platform to process more trades.
• The Group’s marketing strategy is to focus on investing in targeted and cost-effective marketing initiatives which provide measurable results for the Group. The Group has developed proprietary marketing software which helps the Group to monitor the effectiveness of online marketing campaigns and inform marketing spend.

Experienced management team and robust controls:

• All of the founders are actively involved in the Group’s business, including Board members, Gal Haber, CEO, and Alon Gonen, Managing Director.
• The Group manages risk in a number of ways, in particular by limiting financial exposure to any individual customer to a relatively low level as well as limiting exposure to any individual instrument. The Group also has in place a hedging policy designed to further manage risk.

Revenue and profit growth:

• During the year ended 31 December 2012, the Group had over 58,000 active customers (2011: over 45,000) and closed over 10,000,000 trades.
• For the year ended 31 December 2012, the Group generated a profit before tax of US$23,073,000 on revenues of US$56,127,000. Unaudited consolidated results for the three months ended 31 March 2013 saw the Group achieve a profit before tax of US$6,999,000 on revenues of US$19,796,000.

Reasons for Admission:

• The Directors believe that an increasing awareness and willingness for customers around the world to trade derivative products such as CFDs will offer growth potential to the Group.
• The Directors believe that Admission will increase the profile of the Group in the UK and internationally, thereby helping to attract new customers, as well as providing liquidity in the ordinary shares.
• The Group’s net proceeds of the Placing will be used to invest in additional marketing activities to increase brand awareness; penetrate new markets and accelerate growth in existing markets; strengthen the Group’s balance sheet and capital base; give the Group additional flexibility when assessing potential acquisitions; and maintain reserve capital surplus to the Group’s existing mandatory regulatory capital requirements.

Gal Haber, Chief Executive Officer of Plus500, commented,

“We have worked hard to develop and grow Plus500 over the last five years. Our focus on a self-developed trading platform, underpinned by proprietary technology, has enabled us to expand in key regions in a relatively short period of time.

The CFD market continues to expand and our planned IPO is the next evolutionary step in our development.

We believe that there is a significant opportunity to provide a user friendly and reliable CFD trading platform to retail customers and the Company’s Admission to AIM and Placing will support our growth ambitions.”

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.