OFX to Acquire 100% of Canadian Corporate Foreign Exchange Business Firma Foreign Exchange Corporation (Firma)
21 December 2021 - 8:56AM
Business Wire
- Agreement to acquire 100% of Firma for a total consideration of
C$90m (A$98m), representing 9.0x Firma’s last-twelve-months (LTM)
EBITDA to 30 September 2021
- Firma is a global foreign exchange service provider based in
Canada, providing spot and forward products to Corporate
clients
- Provides OFX with greater scale in the Corporate segment and
North America region, adding over 9,600 clients and increasing
OFX’s North America revenue by 121%
- Expected to deliver underlying EPS accretion of c. >20% in
Year 1 and >30% in Year 2, with significant opportunities for
cost and revenue synergies
- Funded from an underwritten debt facility and available cash,
expected to be repaid within four years from completion
- Completion expected in first quarter of FY23, subject to
customary approvals
OFX Group Limited (OFX) today announces that it has entered into
an agreement to acquire 100% of Firma Foreign Exchange Corporation
(Firma) for a total consideration of C$90m (A$98m).
Based in Edmonton, Canada and founded in 1998, Firma is a global
foreign exchange service provider servicing Corporate clients. As
at 30 September 2021, Firma had 194 employees, over 9,600 Corporate
customers and operates from 9 offices in Canada, Australia, the UK,
and New Zealand.
Firma’s key products include spot and market orders,
multi-currency accounts, payments and mass payments and forward
contracts. The company has strong commercial expertise and will
significantly add to OFX’s volumes in major currency pairs such as
USD/CAD and USD/GBP, diversifying its currency flows as well as the
industries its Corporate segment currently serves.
The acquisition delivers incremental revenue to OFX’s Corporate
segment of 93% and to its North America region of 121%1,
representing more than five years of organic growth. With combined
LTM to September 21 pro-forma Group revenue of A$186.5m and EBITDA
of A$55.1m, OFX will be a major specialist Corporate cross border
payments provider in Canada.
OFX Chief Executive Officer and Managing Director, Skander
Malcolm said: “This is our first major acquisition and very much
aligned with our strategy of building scale in the Corporate
segment and growing the North American region. Firma generates
strong earnings from a high-quality customer base and has an
excellent service culture, so there is a lot of alignment with OFX.
By bringing our businesses together we become a much bigger
Corporate specialist with a strong recurring revenue base and
considerable growth opportunities.”
The total consideration represents 9.0x Firma’s LTM EBITDA to 30
September 2021. The Acquisition is expected to generate underlying
EPS accretion of approx. >20% in year one and >30% in year
two following completion. OFX expects to deliver at least $5m of
pre-tax cost and revenue synergies in FY25 through leveraging its
global technology platform, larger footprint of licenses and
enhanced product offering, and from benefits of scale such as lower
banking fees.
The acquisition will be funded by an underwritten debt facility
and existing cash. At completion, OFX expects net debt to pro-forma
EBITDA of approximately 1.5x. Given the strong cash flow profile of
the combined entity, OFX expects to repay its debt in less than
four years, subject to no other value-accretive growth
opportunities emerging which require funding. The Board considers
it prudent to put the share buy-back program on hold to prioritise
repayment of debt.
Mr Malcolm concluded: “Our business is continuing to perform
well, with the positive trends we drove in the first half
continuing into the third quarter. With the addition of Firma we
can accelerate that growth by combining our infrastructure and risk
culture with their customer base and service excellence, delivering
further profitable growth and value accretion for OFX
shareholders.”
The acquisition is expected to complete in first quarter of FY23
subject to customary conditions.
Advisors Goldman Sachs is acting as financial advisor on
the acquisition. Stikeman Elliot is acting as legal advisor on the
acquisition.
About OFX Founded in 1998, OFX is an international money
services provider based in Sydney with eight offices across the
world and more than 400 staff. It offers money transfers and
foreign exchange services for consumer and business clients across
50+ currencies. Through its “digital + human” business model, OFX
provides 24/7 client support to complement its global digital
platform.
____________________ 1 Based on OFX LTM to September 2021 Fee
and Trading Income (Revenue) ex-slippage; growth calculated
excluding synergies
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version on businesswire.com: https://www.businesswire.com/news/home/20211220005888/en/
Media enquiries: Tim Powell, Dentsu PR,
tim.powell@dentsu.com, +61 411 725 595 Elaine Herlihy, OFX,
elaine.herlihy@ofx.com, +61 414 290 571
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