Global Trader sold for EUR36m
August 1, 2007admin No Comments »Financial services group Purple Capital has bought CFD and spread betting provider Global Trader for EUR36m, or R346m. Global Trader is a dominant player in the South African market, and also has operations in Europe North America, Asia, the UK and Thailand.
CFDs and spread trading are ways of taking bets on various stock market price movements. The products have become popular in South Africa, and a number of players have entered the retail market including Dealstream, Nedbank and Ideal CFDs.
Purple Capital says that Global Trader is a high growth business with a relatively mature, highly profitable and cash generating business in South Africa and established, regulated operations in a number of jurisdictions and geographies internationally.
“One of the biggest challenges for South African companies is to spread offshore,” says Purple CEO Mark Barnes.
Barnes declined to give a price:earnings multiple for Global Trader, but said he bought the business on a price:EBITDA multiple of ten times. However, he says the company is trading very well this year, and that the forward multiple is “significantly lower”.
He also notes that Global Trader has spent a lot of money obtaining regulatory approval in various offshore jurisdictions. It has yet to reap the full benefit of these investments, he reckons, with some overseas operations only starting to break even.
Global Trader was founded in Europe in 2000 and conducts in excess of a million transactions per year, worth over $10bn per year, for clients in 29 countries.
The purchase price will be settled by an issue of 88,6m shares for cash at a price of R1,80 per share. Purple Capital says it has received irrevocable undertakings to subscribe for the shares. “The balance will be funded out of current cash resources and funding facilities available to Purple Capital,” the company said in a statement to the JSE. Barnes said the money has been borrowed from major South African institutions.
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