(21 December 2021 – Australia) Business and retail FX provider OFX has agreed to acquire Canadian rival Firma Exchange Corporation for C$90 million (A$98 million).
The acquisition is OFX’s first major corporate action and reportedly equates to five years growth. Firma is a 23-year-old organisation headquartered in Edmonton, Canada offering Spot FX and Forward FX products to 9600 active corporate clients with an average transaction value of C$60,000.
Revenue growth in recent years has been sluggish despite remaining profitable which OFX attributed to historic underinvestment in technology. OFX is funding the C$90 million acquisition with debt. Mr Skander said debt was a more efficient funding solution for the business because it was faster and better suited to OFX’s cash generation profile. It expected to pay back the debt in four years, and the transaction is estimated to be discharged by the end of the FY (financial year) Q1 2023.
East & Partners Canadian Business FX program, based on direct interviews with 2,187 CFOs and corporate treasurers nationwide, reveals that while non-bank FX providers have achieved steady growth in the last five years led by Western Union, CMC Markets, American Express and OFX, totalling 11.3 percent cumulative relationship share, the Big Five domestic majors including RBC, TD, BOM, BNS and CIBC have fought back to increase their cumulative relationship share to 62.3 percent. This marks a record high as international majors such as HSBC, Citi, ING, JPMorgan, BNP Paribas, Bank of America, Deutsche Bank and UBS have found recent gains challenging.
“The acquisition has three drawcards. It’s added 40 percent revenue to the business in a single transaction, expanded our global presence and given OFX a business that has runway to growth. They are very early in their digital transformation. They have only seven percent of their revenue coming from fully digital-enabled clients. We are over 90 per cent.” OFX CEO Skander Malcolm stated.
“We think, we can help them create a much better digital experience which creates upside in client growth, client productivity and recurring revenues for us” Mr Malcolm added.