FNG Exclusive… Following our exclusive report from late January that trouble is brewing at FCA/CySEC licensed Retail FX and CFDs broker OvalX in that OvalX was preparing for mass layoffs and was actively pursuing a sale of most or all of its assets, FNG has learned that the end is indeed likely near for the company and its brand.

FNG has learned that OvalX is finalizing the sale/transfer of most of its client base to rival broker Capital.com, now run by former IG Group CEO Peter Hetherington.

In a town hall style meeting held recently with OvalX employees, OvalX CEO Luca Merolla informed employees that the company’s controlling shareholder, US-based venture capital firm Jump Capital, had decided to stop funding the money-losing parent company, and that the management team was “looking at options”, which will likely lead to the wind-down of OvalX.

Some more background and clarification at this stage is probably worthwhile.

When Switzerland based Guru Capital SA, run by ex Swissquote executives Ryan Nettles and Luca Merolla, announced in late 2020 that Guru was buying ETX Capital (which would later be rebranded as OvalX), that wasn’t entirely correct. The funding for the acquisition came from a US based venture capital firm called Jump Capital, with Jump partner Saurabh Sharma joining the board of parent company Monecor (London) Limited.

Monecor was (and remains) fully owned and controlled by Jump. While Guru had initiated and “put together” the deal, the arrangement with Jump was that Messrs. Nettles and Merolla were to oversee the running of ETX Capital, and in return their Guru Capital firm would receive an equity piece if and when certain targets were met for the business. Luca Merolla eventually took over as CEO of OvalX.

The other clarification is regarding the Italy (Torino) based Oval Money app that Monecor/ETX bought in 2021. That was presented at the time as the opportunity to buy a promising savings app popular among young users and integrate it into the “older” ETX product. While we suppose that anything has promise, Oval Money’s assets were actually bought out of bankruptcy by Monecor/ETX for a paltry sum of about $1.5 million.

Interestingly, not long after the acquisition the company decided to rebrand the whole business as OvalX, with ex Oval people (who had run their previous business into bankruptcy) given key roles within the organization.

Whatever the plans were, the company’s fortunes have continued to slide to the point where Jump has decided to “cut bait” and no longer fund the business. In 2021 – the first year under Guru Capital stewardship – Monecor saw its Revenues fall by 24% to £24.2 million from £31.8 million the prior year, with a net loss of £6.9 million, and we understand that things didn’t turn around in 2022. (Although the company does appear to remain well capitalized, following capital injections from Jump last year).

We expect the parties to make a formal announcement in the coming days. We will continue to follow this story as it develops.