Recent FX Acqusitions
It is now now evident that the world of FX is going towards consolidation, and quickly. In the past year or two, a lot of money has been flowing into this industry from all directions (mainly private equity funds or buyout by public cash-piled firms).
Below is an overview of some of the most significant happenings that took place. Bear in mind this is only a sub-set of events. There were probably dozens more buyouts and mergers of smaller firms than the one mentioned below:
Moneygram bought by Ant Financial for a consideration of USD 1.2bn, after a long bidding war against Euronet. There is still some criticism at the highest levels because Ant is Chinese, but we expect this deal to happen.
Speaking of Euronet, the owner of HiFX and Ria Money Transfer – it has bought XE.com in late 2015 for a consideration of $60m in revolving credit and shares. OFX (traded as OzForex) was also bidding for it.
Currencies Direct bought by Palamon and Corsair Capital for a consideration of £200m. These funds should also be used for an acquisition, we reckon, based on this interview where Currencies Direct’s new boss said he plans on buying Cambridge FX.
Speaking of Cambridge FX, a large US-based payment firm, it was bought by public company Fleector for a consideration of USD 675m just days ago. A very modest price tag for a company which claims to be a leader in North America.
Most Recent Acquisition
Moneycorp has announced just yesterday that it has bought Commonwealth Foreign Exchange, a U.S based company, to get a U.S boost. What does a U.S boost even mean? We suppose it will give them greater reach within the USA (considering how each state approves payment providers individually), together with better banking connections, and a smoother on-boarding process for American clients. The company’s CEO has been recently interviewed and said this expansion has nothing to do with Brexit. and we believe that. The U.S market is getting more and more lucrative, and a company like Moneycorp which among the largest and most respected companies in this field needs to have a local representation there.
Commonwealth Foreign Exchange is not a small company at all. We would call it medium-cap. A staff of 60 employees and USD 3bn transferred each year is quite a lot. They only boast 4,000 clients which is low in comparison to these massive volumes, but in the American market it may make sense – FX firms are not particularly well known there, so the prospective clients are the ones who needs to move serious amounts rather than make small payments (mainly SME’s).
We think Moneycorp is really improving on all aspects, and this acquisition will help it maintain its position as a global leader in international payments.
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