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Gain Capital Holdings (GCAP) |
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This company completed an initial public offering (IPO) of its stock in 2010. View articles that reference this company. Recent IPOs: Globe Specialty Metals • LogMeIn • Invesco Mortgage Capital • Medidata • Chemspec |
Gain Capital Holdings (NYSE:GCAP) provides an online platform to conduct foreign exchange (FX) trades. The company provides Over the Counter (OTC) FX service, 24hours a day to its customer. Gain Capital allows its customers to simultaneously trade one set of currency for the other in the expectation that the purchased one will rise relative to the sold currency. The company uses the principal revenue model, which makes money by acting as the counterparty to its retail customers trades. However, Gain Capital uses the agent revenue model for institutional investors in these cases, the company simply charges a few for each transaction placed.[1]
Gain Capital's principal revenue model is different from one of its main competitors, FXCM (FXCM), which uses the agent model for its retail clients. The principal model, the one used by Gain Capital, consists of the institution offering a price for a currency pair and making money by taking the other side of the transaction. This is sometimes criticized since it creates an inherent conflict of interest since the institution has a disincentive to find the lowest price, but rather a higher price so it can take a larger margin off the other side of the transaction.[2] However, Gain Capital argues that its sophisticated trading system allows it to manage risk while still providing its customers with a competitive rate.[1]
FX trades have historically not been available to retail investors, but since approximately 2000, retail activity has risen by a compounded annual growth rate of 37%. Gain Capital believes that as retail investors become increasingly familiar with foreign exchange, the market will continue to grow. In addition, unlike the equity markets, foreign exchange markets are open 24 hours a day 5 days a week. [3]
The company's initial public offering of stock on the NYSE occurred on December 14, 2010. The company offered 9M shares each for $9 each. This was below the initial price range of $13- $15. The company also cut the number of shares sold by 18% since it had originally planned to sell 11M shares. The offering raised $81M. The lead underwriters of the deal were Morgan Stanley (MS) and Deutsche Bank AG (DB).[4]
Gain Capital's total revenue for 2009 was $188M. This corresponds to a 58% increase over its 2008 figure of $119M. The company's net income for 2009 was $27.7M. For the first 9 months of 2010, GCAP announced a net revenue of $148M, which was above the net revenue figure for the first 9 months of 2009. [5]
References
- ↑ 1.0 1.1 GCAP S-1/A 2010 PROSPECTUS SUMMARY "Our Company" pg 1-3
- ↑ FXCM S-1/A 2010 PROSPECTUS SUMMARY "Our Business" pg 1
- ↑ FXCM S-1/A 2010 PROSPECTUS SUMMARY "Retail FX industry" pg 2
- ↑ Renaissance Capital - IPO Home "Gain Capital prices IPO at $9, well below the range" 15 Dec 2010
- ↑ GCAP S-1/A 2010 PROSPECTUS SUMMARY "Our Company" pg 1-3
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