GAIN, or FOREX.COM, Files For IPO

GAIN Capital Holdings, Inc., and online provider of retail foreign exchange trading and related services with the FOREX.COM portal, has just filed to come public via an initial public offering.  The IPO terms and shares are not disclosed, but for filing purposes it listed a sale as being up to $125 million in shares being sold.  It also listed NASDAQ as the exchange it would trade on, but did not offer up a stock ticker.  The two underwriters listed on the preliminary prospectus are Morgan Stanley and Deutsche Bank.

GAIN’s was founded in 1999 and its total annual customer trading volume grew from $120.3 billion in 2004 to $1.49 trillion in 2008 for CAGR of 87.6%. Its annual customer trading volume “from customers residing outside of China” grew from $114.3 billion in 2004 to $1.32 trillion in 2008, which is represented as 84.3% CAGR.  At the same time, its annual net revenue grew from $22.2 million in 2004 to $190.8 million in 2008 for some 71.2% CAGR. The company’s net income grew from $7.1 million in 2004 to $231.4 million in 2008, shown as 138.9% CAGR.  Its adjusted net income on a non-GAAP basis represents net income/(loss) excluding the change in fair value of the embedded derivative in its preferred stock, increased from $7.1 million in 2004 to $49.6 million in 2008 (62.6% CAGR).

There is also a breakdown on where its customer base comes from… For the year ended December 31, 2008, approximately 56.7% of its entire customer base was located outside of the United States and this represented approximately 41.0% of its total trading volume. Customers residing in China represented approximately 26.8% of its customer base and approximately 11.6% of its total trading volume for the year ended December 31, 2008.

As of June 30, 2009, GAIN had 43,217 tradeable accounts.  The company also noted that its primary direct channel is its retail forex trading Internet website, FOREX.com, whic h is available in English, traditional and simplified Chinese, Russian and Arabic.  Further, it listed that self-directed investors represented 93.1% of total customer trading volume and managed accounts represented the remaining 6.9% of its customer trading volume.

GAIN provides both buy and sell quotes for 43 currency pairs.  Its full SEC Filing for its IPO is available.

JON C. OGG
August 31, 2009