Brokers, Market News|December 17, 2010 8:53 pm

Gain Capital IPO At $9 Per Share – Lower Than Expected Valuation

Gain Capital, which owns one the most sought out domain names (forex.com) in the forex trading industry went public at a lower than expected price. Shares went for $9 though expected to go in the $13 to $15 range. This is the second IPO for the forex industry after FCXM a few weeks ago.

The IPO however is unlike typical reasons. A mere 407,000 shares were sold in the IPO by Gain Capital, the remaining 8.5 million shares of common stock was sold by existing shareholders who were cashing in on the exit. While most shareholders exited, Vantage Point continued to hold on to a near 30% holding in the company.

The $3.6 million raised through the IPO only cover the expenses. The company will trade under the ticker GCAP. The mood set by the first two forex IPOs is not exactly the best. Both are clearly means for investors and existing shareholders to exit. There is not much capital generated for growth opportunities or to accelerate operations.

Gain Capital is an online provider of products and service in forex and other commodities such as gold. The company has customers in 140 countries, with over 50% of the clients being outside the United States. Its total annual customer trading volume grew from $231.9 billion in 2005 to $1.2 trillion in 2009. For the nine months ended Sept. 30, Gain Capital generated $148.1 million in revenue and net income of $18.9 million.

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