Beeks Financial Cloud Group has acquired the assets of Commercial Network Services; a US-based online service provider specialized in hosting low latency algorithmic trading systems, virtual private networks, and streaming media from data centers in London, New York, and Los Angeles.
CNS, which was founded in 2000 and now serves approximately 1,000 retail traders across multiple geographies, for a total consideration of up to $1.4 million, with $1.3 million being settled in cash on completion and $0.1 million being held as retention subject to the satisfactory completion of warranties.
Bringing an annualized recurring revenue of approximately $1.0 million, CNS will also promote synergies by adding new customers and data center locations to Beeks’ retail offering. The firm, which is expected to be earnings enhancing within the first full year of Beeks’ ownership, has made a profit before tax of $0.17 million in 2018.
The deal is in line with the growth strategy drawn ever since the 2017 IPO, combining organical growth with tactical and strategic acquisitions. At the time, Beeks was valued at £24.5 million as it aimed to raise £7 million from several institutional investors such as Hargreave Hale, Octopus, and Livingbridge.
Beeks, driven by upselling to existing clients and onboarding of new institutional clients, has chosen to use part of the money raised on strengthening its retail business. Gordon McArthur, CEO of Beeks Financial Cloud, told The Industry Spread that they are always on the look-out for further M&A opportunities.
“This acquisition does not change our focus with regards to institutions as we cater for both retail and institutional clients, but was an opportunity to supplement our retail offering.”
The $1.4 million deal has allowed the Infrastructure-as-a-Service (IaaS) provider for automated trading in Forex, Futures, Equities, Fixed income and cryptocurrency financial products to scale its business further.
“At the time of our IPO, we stated our belief that the fragmented nature of our industry would provide us with the potential to augment our organic growth with both bolt-on and strategic acquisitions. Commercial Network Services is a profitable business whose services reflect those we offer to retail traders. The business, therefore, fits well within our acquisition criteria and we anticipate will be a valuable addition to the Group”, McArthur stated.