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 through Fournais Holding A/S and Finland’s Mandatum Group have decided to “launch a review of strategic opportunities’. The aim is to provide Saxo with the best possible foundation to continue its growth journey, serve clients and partners and further develop employees and company culture.
Saxo Bank and the shareholder group have collectively appointed investment bank Goldman Sachs (NYSE:GS) as a financial advisor to help them review strategic opportunities.
What such announcements usually mean is that the shareholders want to exit, with the investment banker being hired to either execute an “M&A” sale process, or consider an initial public offering (IPO) on a major stock exchange, or both. (at least initially) until it is decided which route is best or most likely to be successful. The investment banker is (usually) paid a modest upfront fee, with a substantial commission to be paid upon successful completion of a sale or exit from the IPO.
We reported in April that Saxo Bank was talking to potential investment banking advisers to explore a sale of the company. Both of Saxo’s main outside shareholders, Geely Group (just under 50%) and Mandatum (just under 20%) have said they would like to exit their investment in Saxo Bank.
Saxo Bank has attempted to go public in 2022 through a merger with a special purpose acquisition company (SPAC) listed on the Euronext Amsterdam stock exchange. The deal, which would value Saxo Bank at around €2 billion, would provide liquidity to Geely and Sampo (which later transferred its stake to Mandatum), which at the time both expressed a desire to exit the their respective investments in Saxo Bank. However, the transaction was withdrawn later that year.
Although Goldman Sachs is generally regarded as one of the world’s leading investment banking consultancies, it may have its work cut out for them, especially if shareholders want to exit at a valuation close to the 2 billion euro IPO-via-SPAC effort from before two years.
While Saxo Bank is a long-term leader and is often seen as the ‘Steady Road’ of the FX and CFDs industry, the company’s performance has slowly fallen as Saxo Bank posted its first half-year loss in several years in Q2 half of 2023. , without growth at its peak.
And things don’t appear to have improved much in the first half of 2024, although Saxo is yet to report its financial results for the first half of 2024. After a 20% drop in May, client trading volume at Saxo Bank continued to decline in June 2024, with total transactions at $371.6 billion for the month, down 4% from the previous month. Saxo’s core forex trading volume fell to a multi-year low in June 2024, totaling $78.1 billion.
Saxo Bank started the second half of 2024 by sending a note to its institutional partners that it had taken the decision to stop the entry of clients in certain countries, including Brazil, Canada, China, Cyprus, Egypt, India, Indonesia, New Zealand, South Africa , Taiwan and Turkey, among others.