Global Brokerage Inc. (GLBR)

[Green2013]

“We have multiple bids for each subsidiary and are seeing significant competition for these properties. We are in active discussions to select the best bid and move towards closing in the near future,” he explained.

FXCM Trading Volume by Region
FXCM Trading Volume by Region, Source: FXCM

From the $50 million which Mr. Niv mentioned, $22 million in cash lie on the balance sheet of FXCM Japan, while the remaining $28 million are in the Hong Kong subsidiary of FXCM Inc.

The company’s CEO Drew Niv stated, “We believe that the sale proceeds plus cash freed from the balance sheet of these entities could exceed $250 million, which would go a long way towards repaying if not fully repaying the Leucadia loan.”

The total EBITDA from the Japanese business of the company in 2014 was $6 million on a non-GAAP basis. Back in 2011, FXCM Inc (NYSE:FXCM) paid $5 million for GCI, which had 17,000 accounts and $110 million in equity. Later that year, the firm took over Foreland paying $17 million for the aquisition.

Considering the lucrative Japanese market and the expansion appetite of many companies to acquire businesses in the region, the sale of this unit could net FXCM somewhere between $40 and $50 million.

The Hong Kong unit of the firm generated about $2.5 million in non-GAAP adjusted EBITDA in 2014. The jurisdiction and the lack of wide media coverage of the Swiss National Bank conundrum which FXCM faced, likely saved the value of the brand and clients continued to hold their accounts with the brokerage.

The main proceeds from potential sales will come from the non-core business of FXCM Inc (NYSE:FXCM). Back in 2012, FXCM acquired Lucid Markets for $176 million, with the estimated total costs of the investment totaling $192 million.

In order to optimize its RPM, FXCM Inc (NYSE:FXCM) has announced that it will be returning the dealing desk model for clients with equity below $20,000.

The company’s CEO Drew Niv said during the earnings call, “To accelerate growth in our core business we will launch a hybrid desk model for small retail FX accounts. These are accounts with less than $20,000 of deposits. While these accounts maybe large in number, they still represent much less than half of our trading volume.”

FXCM Inc aims to balance between dealing desk and agency model execution in order to maximize its RPM. The brokerage will present a choice for clients between higher leverage options with dealing desk execution and agency execution with lower leverage.

- See more at: http://forexmagnates.com/fxcm-inc-conference-call-review-huge-business-shakeup-coming/#sthash.rsGcneDy.dpuf

- See more at: http://forexmagnates.com/fxcm-inc-conference-call-review-huge-business-shakeup-coming/#sthash.rsGcneDy.dpuf