Seeking Alpha
Profile| Send Message|
( followers)

Gain Capital Holdings (NYSE:GCAP), an online provider of forex trading and related services, priced its IPO on 14th December, 2010, at $9 per share, well below its expected range and struggled on first day trade to remain positive and closed at -1.7%.

Business Overview (from prospectus)

We are an online provider of retail and institutional foreign exchange, or forex, trading and related services founded in 1999 by a group of experienced trading and technology professionals. We offer our customers 24-hour direct access to the global over-the-counter, or OTC, foreign exchange markets, where participants trade directly with one another rather than through a central exchange or clearinghouse. We also offer our retail customers located outside the United States access to other global markets on an OTC basis, including the spot gold and silver markets, as well as equity indices and commodities via instruments linked to the performance of the price of an underlying security or other products called “contracts-for-difference”. Our trading platforms provide a wide array of information and analytical tools that allow our customers to identify, analyze and execute their trading strategies efficiently and cost-effectively. We believe our proprietary technology, multilingual customer service professionals and effective educational programs provide a high degree of customer satisfaction and loyalty. Furthermore, our scalable and flexible technology infrastructure allows us to enhance our product service offerings to meet the rapidly changing needs of the marketplace.

Offering: 9 million shares (8.6 million by selling stockholders) at $9 per share.

Lead Underwriters: Morgan Stanley (NYSE:MS), Deutsche Bank Securities (NYSE:DB)

Financial Highlights:

Revenue increased $34.3 million, or 30.1%, to $148.1 million for the nine months ended September 30, 2010 compared to $113.8 million for the nine months ended September 30, 2009...Total expenses increased $26.4 million to $149.3 million for the nine months ended September 30, 2010...Selling and marketing expenses increased $1.4 million, or 5.2%, to $28.2 million for the nine months ended September 30, 2010 from $26.8 million for the nine months ended September 30, 2009...Trading expenses and commissions increased $8.2 million to $18.6 million for the nine months ended September 30, 2010 compared to $10.4 million for the nine months ended September 30, 2009...Net loss decreased by $1.6 million to $18.9 million for the nine months ended September 30, 2010 compared to a net loss of $20.5 million for the nine months ended September 30, 2009...

Competitors

The retail forex trading market is fragmented and highly competitive. Our competitors in the retail currency market can be grouped into several broad categories based on size of net capital, technologies, product offerings, target customers and geographic scope of operations. Market Leading Forex Trading Firms include our firm and other firms with similar business models, such as Forex Capital Markets LLC, Global Futures & Forex, LLC and OANDA Corporation. The firms within this category are our primary competition for our existing forex trading services. Small/Specialized Forex Trading Firms include firms such as FXDirectDealer, LLC and InterbankFX, LLC. These firms, to date, have not been our core competitors due to their smaller size and technology and marketing limitations. Other Online Trading Firms include firms such as OptionsXpress Holdings (NASDAQ:OXPS), Inc., E*TRADE Financial Corp. (NASDAQ:ETFC), TDAMERITRADE (NYSE:AMTD) and Scottrade. These firms are generally either niche players focused on a particular product, such as equity options, or traditional online equity brokers, that have expanded into other financial products that may already, or will in the future, include forex trading.

Additional Resources:

Source: Gain Capital Holdings Prices IPO Well Below Expected Range