Interactive Brokers intends to continue making acquisitions on opportunistic basis
Candidates should enable Interactive Brokers to offer better execution alternatives to its current and prospective customers, allow it to influence exchanges to provide competing products at better prices using sophisticated technology, or enable it to acquire either technology or customers faster than it could develop them on its own.
Shortly after electronic trading major Interactive Brokers Group, Inc. (NASDAQ:IBKR) published its financial results for the second quarter of 2020, the company has filed a 10-Q report with the Securities and Exchange Commission (SEC).
Interactive Brokers notes that it regularly evaluates potential strategic investments and acquisitions. The company holds strategic investments in electronic trading exchanges including BOX Options Exchange, LLC and OneChicago LLC. In addition, in June 2018, it made a strategic investment in Tiger Brokers, an online stock brokerage established for Chinese retail and institutional customers.
On March 20, 2019, Tiger Brokers priced its initial public offering (IPO) of American Depositary Shares listed on Nasdaq Global Select market and, concurrently with the IPO, Interactive Brokers purchased unregistered ordinary shares in Tiger Brokers through a private placement offering which transactions resulted in a beneficial ownership interest of 7.6%.
Interactive Brokers intends to continue making acquisitions on an opportunistic basis, generally only when the acquisition candidate will enable the broker to offer better execution alternatives to its current and prospective customers, allow it to influence exchanges to provide competing products at better prices using sophisticated technology, or enable it to acquire either technology or customers faster than it could develop them on its own.
As of June 30, 2020, there were no other definitive agreements with respect to any material acquisition.
Let’s note that, during the quarter to end-June 2020, other income increased $86 million from the prior year quarter. This increase reflected $88 million related to Interactive Brokers’ strategic investment in Up Fintech Holding Limited (“Tiger Brokers”), which swung to a $14 million mark-to-market gain in the quarter from a $74 million mark-to-market loss in the prior year quarter.
However, for the six-month period to June 30, 2020, other income decreased $49 million compared to the prior year six-month period, to a loss of $4 million. This decrease included $23 million related to Interactive Brokers’ strategic investment in Tiger Brokers, which decreased to a $6 million mark-to-market gain in the first six months of 2020 from a $29 million mark-to-market gain in the prior year six-month period.
