Copenhagen based Retail FX and CFDs broker Saxo Bank has announced that its shareholders – namely China’s Geely Group, co-founder and CEO Kim Fournais via Fournais Holding A/S, and Finland’s Mandatum Group have decided to “initiate a review of strategic opportunities”. The objective is to provide Saxo with the best possible foundation to continue its growth journey, serve clients and partners, and further develop its employees and company culture.
Saxo Bank and the shareholders group have collectively appointed investment bank Goldman Sachs (NYSE:GS) as financial advisor, to assist them with the review of strategic opportunities.
What announcements like this usually mean is that the shareholders want to exit, with the investment banker hired to run either an “M&A” sale process, or examine an initial public offering (IPO) on a major stock exchange, or both in parallel (at least initially) until deciding which route is best, or more likely to be successful. The investment banker is (usually) paid a modest up-front retainer, with a major fee to be paid upon successful completion of a sale or IPO exit.
We had reported back in April that Saxo Bank was speaking to potential investment banking advisors to explore a sale of the company. Both of Saxo’s main outside shareholders, Geely Group (at just under 50%) and Mandatum (just under 20%) have indicated that they would like to exit their investment in Saxo Bank.
Saxo Bank attempted to go public in 2022 via a merger with a Euronext Amsterdam listed special purpose acquisition company (SPAC). The deal, which would have valued Saxo Bank at about €2 billion, would have provided liquidity to Geely and Sampo (which later transferred its stake to Mandatum), which at the time both voiced their desire to exit their respective Saxo Bank investments. However the transaction was pulled later that year.
Although Goldman Sachs is roundly viewed as one of the world’s top investment banking advisor firms, they may have their work cut out for them, especially if the shareholders want to exit at a valuation anywhere near the €2 billion IPO-via-SPAC attempt from two years ago.
While Saxo Bank has been a longtime leader and is often viewed as the “Steady Eddy” of the FX and CFDs sector, the company’s performance has dropped off of late with Saxo Bank posting its first semi-annual loss in several years during 2H-2023, with no growth on its top line.
And things don’t seem to have improved much in the first half of 2024, although Saxo has yet to report its 1H-2024 financial results. Following a 20% decline in May, client trading volumes at Saxo Bank continued to fall in June 2024, with total trading coming in at $371.6 billion for the month, down 4% from the previous month. Saxo’s core FX trading volumes fell to a multi-year low in June 2024, totaling $78.1 billion.
Saxo Bank began the second half of 2024 by sending a note to its institutional partners that it had made the decision to stop onboarding clients in certain countries, including Brazil, Canada, China, Cyprus, Egypt, India, Indonesia, New Zealand, South Africa, Taiwan, and Turkey, among others.
