OFX Group to complete acquisition of Firma FX business in 2023
Sydney-headquartered OFX Group Limited today announced that it has agreed to take full ownership of Firma Foreign Exchange Corporation for a total consideration of C$90 million ($69.62 million).
Canada-based Firma generated approximately $7.7 million in adjusted EBITDA in the FY 2021, meaning that the price tag amounts to 9× of its earnings before interest and taxes. Subject to customary conditions, and pending regulatory approvals, the takeover will likely be completed in the first quarter of 2023.
Founded in 1998, Firma is headquartered in Edmonton and provides multi-currency accounts, payments and mass payments, spot and forward products to about 10,000 corporate clients. The 23-year-old money service business reports that its client’s average transaction value is about $60,000.
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.”
Firma had 194 employees spanning nine offices in Canada, Australia, the U.K., and New Zealand.
In consideration of the acquisition of Firma, OFX Group (formerly OzForex) will use underwritten debt facility and existing cash to fund the deal. The company also noted that it expects the buyout to grow its corporate segment revenue by 93% and contributes to a 121% increase in the merged entity’s activity in the North American region.
Specifically, OFX will leverage Firma’s capabilities to significantly increase volumes in major currency pairs such as USD/CAD and USD/GBP. The savings would represent more than five years of organic growth, as well as diversifying OFX’s currency flows.
Given the strong cash flow profile of the combined entity, Australia-based OFX expects to repay its debt in less than four years.
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.”