FNG Exclusive… FNG has learned via regulatory filings made in Canada that Retail FX and CFDs broker ThinkMarkets has been unable to complete its planned IPO – via a merger with publicly traded FG Acquisition Corp – by the already-once-extended deadline of September 15, as FG has been unable to raise the necessary capital to go through with the transaction.

The parties have agreed to once again extend the deadline to complete the deal, this time to November 30, 2023.

Some quick background…

ThinkMarkets announced that it was going public back in May, by merging with FG Acquisition Corp (TSE:FGAA.U), a special purpose acquisition company (or SPAC) which had raised about USD $115 million. The initial plan was for the deal to be completed by the end of July 2023, which would have seen ThinkMarkets IPO on the Toronto Stock Exchange at a valuation of about $160 million.

The deal would have injected much-needed cash into ThinkMarkets, as the company has been losing money and racking up debt the past two years, even leading to a “going-concern” warning against ThinkMarkets being issued by the company’s auditors. (More on that below).

However the deal hit a major snag when (virtually all of) FG’s class A shareholders elected to get their money back from FG instead of going ahead with the deal, as was their right. That occurred after it became apparent (following exclusive reporting here at FNG) that ThinkMarkets is in somewhat of a precarious state as noted above, with mounting losses totaling more than USD $20 million over the past two years, falling revenues, growing debt, and a “going concern” warning issued by ThinkMarkets’ auditors in Australia hanging over the company.

ThinkMarkets and FG then (in late July) extended the deadline for their planned merger to September 15, i.e. last Friday. The minimum financing conditions set forth in the agreement between the two parties require FG to raise capital (through a private placement of a combination of convertible debentures, debt and equity) of at least $10 million, and apparently it has not been able to do so.

For the time being, FG Acquisition remains a publicly traded but cash-less empty shell company, after virtually all its cash was refunded to its investors, as noted above.

FG’s original SPAC charter called for the company to complete a merger by July 2023, but the company has managed to get that deadline extended by a year, to July 2024. So if FG is still unable to raise the necessary capital to go ahead with the merger with ThinkMarkets by November 30, it is still possible for the parties to extend that deadline again. However in our view the longer this continues, with FG unable to get investors to put fresh cash into the company, the less likely a deal will get done.

Indeed, the past two attempts by Retail FX and CFD brokers to go public via the SPAC-merger route ended in failure, namely eToro and Saxo Bank.

We will continue to follow this story as it develops.