Forex IPO: GAIN Capital Holdings (GCAP)

GAIN Capital Holdings Inc. (NYSE: GCAP) is coming public this morning via an initial public offering.  The company priced 9 million shares of common stock at $9.00 per share. The company is an FX player as it offers online foreign exchange trading and related services.

The amended prospectus from December 9 showed that GAIN was selling 11,000,000 shares of common stock and the indicated price range was $13.00 to $15.00 per share.

For the year ended December 31, 2009, 49.7% of customers were U.S.-based, representing approximately 54.5% of total annual trading volume.  Approximately 50.3% of customers were located outside of the United States, representing approximately 45.5% of total annual trading volume.  Annual net revenue grew from $37.9 million in 2005 to $153.3 million in 2009, while net income grew from $8.2 million in 2005 to $28.0 million in 2009.

Of the 9 million shares, GAIN Capital is offering only 407,692 shares of common stock in the offering.  The rest of the shares, some 8,592,308 shares of common stock, are being sold by shareholders.  GAIN Capital will not receive any proceeds from the sale of shares by the selling stockholders.

Morgan Stanley and Deutsche Bank are the joint book-running managers; co-managers are JMP Securities, Raymond James, and Sandler O’Neill.  Certain selling stockholders have granted the underwriters an option to purchase up to 1,350,000 additional shares of common stock to cover over-allotments, if any.

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JON C. OGG