Singapore Exchange plans to acquire foreign-exchange trading platform MaxxTrader from FlexTrade Systems for US$125 million to extend its reach in the over-the-counter FX segment, the multi-asset exchange said in a filing to SGX Friday.
The acquisition price may also have an additional up to US$35 million performance-based earn-out, as well as a further equity or loan injection of US$5 million for general corporate purpose and net working capital, the filing said.
The deal, priced at around 8.3 times 2020 revenue, will be financed with external borrowings, SGX said.
The deal, expected to be completed by December, is aimed at accelerating SGX’s plans to build a global FX ecosystem and marketplace for OTC and on-exchange currency derivatives, the exchange said.
Singapore-based MaxxTrader provides FX pricing and risk services for sell-side institutions such as banks and broker-dealers, as well as acting as a multi-dealer platform for hedge funds. The company has client and dealer franchise with over 100 global banks, regional banks, broker-dealers and hedge funds connected to its platform, which has average daily volume (ADV) of more than US$17 billion as of end-June, the statement said.
The ADV is expected to grow at a compound annual growth rate of more than 25 percent over the medium term, SGX said.
“MaxxTrader’s strong sell-side client base complements the buy-side clientele of BidFX, a leading cloud-based provider of electronic FX trading solutions which SGX acquired last year,” SGX said. “Together, these acquisitions form part of SGX’s multi-phase strategy in building an integrated Asian FX marketplace for global investors.”
Loh Boon Chye, CEO of SGX, said the next step would be to offer clients a full suite of FX futures and OTC services by building a primary FX OTC marketplace based in Singapore.
“This would accelerate our vision to create fungible and convenient access for diverse, global customers to different pools of liquidity under one integrated platform on SGX, and build Asia’s largest one-stop venue for international FX OTC and futures participants,” Loh said in the statement.