Forex IPOs – will any more firms go public explained by professional Forex trading experts the “Forex IPOs – will any more firms go public” FX trading team.
Forex IPOs – will any more firms go public?
In the aftermath of FXCM’s and Gain Capital’s successful IPOs last December, a number of other Forex firms (and their shareholders) have begun to look more closely at going public as well. While we understand that a number of other firms would like to go public soon – and are looking at stock markets including the NYSE and Nasdaq in the US, the London Stock Exchange, and the Toronto Stock Exchange as listing options – the road to becoming a public company will in our view be a very difficult one for other Forex firms, certainly for the foreseeable future.
Why difficult? We divide our answer into two parts:
1)Forex Industry Issues.
a.Low trading multiples. Shareholders of Forex companies have to question whether they want to be valued at the relatively low valuation multiples which have been set in the market for FXCM and Gain. (For more on public and M&A valuation multiples see page 26 of our updated-for-2011 Online Forex Industry Report).
b. FXCM and Gain Capital IPOs have flopped. Like in many areas of life and business, in the IPO world success begets success (and vice versa). Nothing brings investors to an industry like the success of similar companies, and conversely nothing scares investors away from an industry like losses. And while we believe that just going public was a major success for FXCM and Gain Capital (Forex.com), both of those companies have been a flop as stocks. FXCM is down 17% from its IPO price, Gain is down 12% – and that is while global stock markets have been up significantly since FXCM priced on December 1 – the S&P500 is up 9%, the FTSE100 by 5% over that period. In Europe things have not been much different, with industry leader IG Group’s share price down about 9% since announcing a large Japan-related writeoff in January; London Capital Group’s shares are off 27% since mid February; and FxPro failed in its attempt at going public in London last fall.
Forex IPOs – will any more firms go public Conclusion
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