FNG Exclusive… FNG has learned that 10-year-old Retail FX and CFD broker ThinkMarkets is in the latter planning stages for an initial public offering (IPO).
The company is working with investment bankers including Citi, which have indicated to ThinkMarkets that the likely valuation range for the company would be around $300 million. The plan would be to raise about $100 million, most of which would likely go to the company but some of which might be in the form of existing shareholders cashing in part of their positions.
While no final decision has been made, the IPO appears to be centered around the Australia market with a listing on the ASX – the Australian Securities Exchange, Australia’s primary securities exchange. The target is to complete the IPO by the end of 2020.
Reports from Australia indicate that Citi has been setting up meetings for ThinkMarkets management with a number of leading fund managers in the country and abroad, to help familiarize them with the business and those behind it. A pre-IPO roadshow such as this is typical in cases where there are not a lot of comparable publicly traded companies in that particular market. Australia is home to a number of large and successful retail FX brokers such as Pepperstone, AxiTrader, GO Markets and IC Markets, but they all remain privately held companies.
ThinkForex was established in 2010 by brothers Nauman and Faizan Anees in New Zealand, and relocated its headquarters to Australia upon obtaining ASIC regulation in 2012. ThinkForex rebranded as ThinkMarkets in 2016. The company has dual headquarters in Melbourne and London, where ThinkMarkets set up its FCA-licensed subsidiary TF Global Markets (UK) Limited in 2015. The firm also has a licensed subsidiary in South Africa, established in 2019. ThinkMarkets offers trading on its proprietary ThinkTrader platform, as well as MT4 and MT5.
The pre-IPO roadshow documents indicate that ThinkMarkets has near-tripled its size and Revenues over the past year, driven in large part by the surge in retail trader activity globally since the outset of the Covid-19 crisis, and the market volatility which ensued.
This isn’t the first time ThinkMarkets has thought about going public. In 2018 the company raised what it was hoping was a pre-IPO funding round of $5.6 million, led by Australia’s Regal Funds Management and mining entrepreneur Tolga Kumova. That round was upped to $15 million in 2019, with Regal becoming the largest shareholder in ThinkMarkets after the Anees brothers’ controlling position.
However that IPO attempt was derailed by a lull in client trading activity at ThinkMarkets (and in the Retail FX sector globally) as the UK’s FCA and other EU regulators tightened rules around online trading – mainly, a cut in leverage that can be offered to retail clients. Australia’s regulator ASIC at the same time started making it tougher for ASIC licensed firms to take on clients from abroad (mainly, China based clients).
The pre-IPO roadshow to prospective investors is indicating that ThinkMarkets is doing about $75 million in annual revenues. However it was unclear if that was a past-12-months figure, or more of a run-rate based on higher client activity levels through the first half of 2020.