IG Group Holdings, a spread betting operator in London, has raised £82 million via a placing this morning to fund its acquisition of a majority stake in FXOnline Japan K.K.
FXOnline, a foreign-exchange trading company in Tokyo, has agreed to sell IG 87.5 percent of its issued share capital for £112 million, with a call option to acquire the remaining 12.5 percent from January 2011.
"The Group evaluates potential new markets as part of its strategy to further strengthen and extend its geographic reach," IG said in a lengthy stock-exchange release discussing the acquisition's details and motivations.
"The Directors of IG believe that FXOnline complements the Group’s existing operations and strategy within the Asia Pacific region and provides the Group with immediate scale and infrastructure in a key strategic market," it added.
For its part, FXOnline has shown impressive year-over-year revenue growth across the 2006, 2007 and 2008 fiscal years -- this on top of an 81 percent jump in profit between 2007 and 2008.
Moreover, the company, which was founded in 2002 by its current chief executive James D. Gow, has in the five months to September experienced above-average account openings and daily revenue.
Mr. Gow, a British national, currently holds 37 percent in FXOnline, with 49.9 percent held by FinTech Global Inc., a boutique investment bank in Tokyo, and Mizuho Capital, the venture capital group affiliated with Mizuho Corporate Bank, Japan's second-largest bank by assets. The remaining share capital is held by current and former management and employees.
The FXOnline trading platform is expected to be relocated to IG's data center in the United Kingdom by November 2008.
As part of the deal, Andrew R. MacKay, an executive director of IG, will relocate to Tokyo to oversee the integration -- costs for which IG said would be "minimal."
This morning's placing was underwritten by UBS A.G., the Swiss investment bank.
In early-afternoon trading, IG was up 16.25 pence, or 5.44 percent, to 314.75 pence.
Click here to view this morning's stock-exchange statement from IG, which includes an update on current trading.
Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.