FairFX, a multicurrency payments and banking service, announced that it has acquired City Forex for £6 million payable in cash, to be paid from existing FairFX cash resources, with the approval of the UK Financial Conduct Authority.
The initial consideration for the acquisition is £5.25 million with the remaining consideration of £0.75 million paid nine months after completion. The acquisition of the entire issued ordinary share capital of City Forex should enhance earnings for FairFX, increase economies of scale and add product innovation.
“The acquisition of City Forex is a key milestone in the evolution of FairFX and will immediately enhance the Group’s earnings. City Forex is a long-standing partner of FairFX, we know the Company and its people well and we are delighted to welcome them into the FairFX Group”, said Ian Strafford-Taylor, Chief Executive Officer, at FairFX, “This transaction fits perfectly with our stated strategy as it increases our scale, rationalizes our supply chain and brings their innovative system within the Group.”
City Forex offers International Payments – with approximately 2,000 business and 8,000 private client customers – and Travel Currency, which are both accessible to both business and consumer segments through its proprietary platform and its three central London based branches respectively. The Travel Currency division fulfills almost 200,000 currency orders per annum across a number of supply verticals, including walk-in retail trade, the servicing of employee discount schemes, corporate accounts and supply partnerships such as that undertaken with FairFX.
It is City Forex that provides the operations for FairFX’s Travel Currency service since 2007. City Forex’s large and growing International Payments business is expected to provide economies of scale from banking partners when combined with existing FairFX volumes.
City Forex’s proprietary system processes both the Travel Currency and International Payments businesses with a high degree of automation. 40% of City Forex business is through the customer-facing portal offering “self-serve” international payments to corporates at bespoke spreads. The end-to-end nature of the platform, covering customer interface all the way through to automated settlement, represents a significant jump forward in functionality and efficiency for the Group. Cross-selling FairFX products to City Forex customers will be a top priority, particularly for the FairFX Corporate Expense Card and Platform.
City Forex made revenue of £4.4 million in Q3 2017 (YoY) from turn-over of £570 million which generated an EBITDA of £0.7 million and a PBT of £0.3 million. The company had assets, excluding client cash and grossed up debtors and creditors, of £4.1 million.