The Board of IG Group Holdings plc (“IG” and, along with its subsidiaries, the “Group”) is happy to announce the proposed acquisition of tastytrade, Inc. (“tastytrade”), a excessive development US on-line brokerage and buying and selling training platform with a number one place in US listed derivatives, primarily choices and futures, and over 105,000 energetic accounts1 (the “Acquisition”).
▪ Landmark transaction that expands and diversifies IG’s development drivers via entry into the world’s largest listed derivatives market. With an estimated 1.5 million retail merchants, the US choices and futures market is bigger than the rest-of-world CFD/FX and European Turbo markets combined2.
▪ tastytrade is very complementary to IG’s current shopper providing, including a leading3 supplier of trade traded derivatives and growing the contribution from agency-only actions.
▪ The transaction considerably will increase the dimensions and relevance of IG’s current US enterprise via the acquisition of a fast-growing, excessive margin enterprise that’s nicely positioned to profit from the structural development in self-directed investing within the US listed choices and futures market.
▪ IG and tastytrade share a robust tradition and client-centric ethos; each firms additionally give attention to the identical shopper demographic of formidable, self-directed retail merchants.
▪ Complete consideration of $1.0 billion to be paid to tastytrade’s shareholders, comprising $300 million in money and the issuance of 61.0 million IG shares, valued at $700 million4.
▪ Following completion of the Acquisition, key tastytrade administration shareholders, comprising Tom Sosnoff (Co-CEO, tastytrade), Kristi Ross (Co-CEO and President, tastytrade), Scott Sheridan (CEO, tastyworks) and Linwood Ma (CTO, tastytrade), will be a part of the IG senior management crew and proceed of their present roles to assist drive additional development within the enterprise, and can collectively personal roughly 5.7% of the enlarged share capital of IG.
▪ Financially engaging, with the Acquisition anticipated to be low single digit accretive to IG’s adjusted earnings per share within the first full 12 months submit completion5.
▪ Completion of the Acquisition stays topic to the satisfaction of customary situations, together with regulatory and anti-trust consents within the US.
June Felix, Chief Government of IG, commented, “I’m thrilled to welcome tastytrade to the IG Group household. This acquisition will materially develop and scale our enterprise within the US and see us additional diversify into the thrilling excessive development market of US retail choices and futures, a market which is adjoining to IG’s core retail buying and selling talent set. The US market has greater than 1.5 million retail merchants and is the most important derivatives market on the earth. tastytrade has grown impressively and confirmed itself to be an revolutionary market disrupter passionately dedicated to delivering for his or her shoppers. The monetary and strategic rationale underpinning this deal are compelling. I’m assured that with our shared client-centric ethos, ardour for innovation and development, IG and tastytrade will show a successful mixture.”
Tom Sosnoff, Co-Founder and Co-CEO of tastytrade, commented, “Early on we knew tastytrade was a really particular firm. Whereas our long-term purpose has at all times been to go international, we waited virtually 10 years till we discovered the proper associate and excellent match. Collectively we are going to give attention to empowering the self-directed investor and alter the best way individuals understand and have interaction with monetary markets.”
Kristi Ross, Co-Founder and Co-CEO of tastytrade, commented, “We created tastytrade with a imaginative and prescient to problem self-directed buyers to suppose and commerce strategically. We constructed an ecosystem to empower them. No different agency has constructed a retail dealer ecosystem in fairly the identical method: delivering genuine, enjoyable and actionable research-based content material via our uniquely developed monetary media community; to our two revolutionary brokerage companies with intuitive front-end expertise, constructed on excessive frequency middleware; to a retail-focused futures trade. IG shares our mission, and equally has a deep-rooted observe report of innovation, management within the monetary markets with a strong and scalable infrastructure, and most significantly, we share a customer-centric philosophy. We’re excited to work with IG to make derivatives buying and selling extra accessible for retail buyers all over the world.”
1. Info on tastytrade
tastytrade is a singular and fast-growing platform that gives differentiated monetary content material and dealer training alongside a classy choices and futures brokerage. tastytrade was based and is led by an entrepreneurial administration crew who beforehand created the extremely profitable choices and futures buying and selling platform, thinkorswim (acquired by TD Ameritrade in 2009). It operates via two main entities: tastytrade, a web-based monetary community that gives actionable buying and selling content material to educated retail merchants, and tastyworks, a number one on-line brokerage platform enabling self-directed retail merchants to commerce US choices and futures (84% choices; 9% futures; 7% equities)6. The distinctive and differentiated shopper proposition has made tastytrade a disruptive pressure within the US retail choices and futures market.
Based in 2011, tastytrade’s give attention to dealer training and authentic content material, alongside its subtle brokerage providing, supplies a transparent aggressive benefit over friends. With c.900,000 distinctive registrants, tastytrade is without doubt one of the most watched monetary networks within the world7, partaking merchants throughout 190 international locations, with 8 hours of cost-free, commercial-free, dwell interactive content material every day, offering market commentary and actionable buying and selling methods associated to choices and futures buying and selling and the inventory market. Distributed via www.tastytrade.com, YouTube, iTunes, Apple TV, and others, the 50+ exhibits per week attraction to each newbie and superior merchants.
Launched in 2017, tastyworks is already a number one unbiased on-line brokerage platform for US trade traded derivatives merchants with a platform constructed on proprietary and extremely scalable expertise. Reflecting its distinctive client-focused philosophy and attraction to a large shopper demographic, tastyworks has constructed a robust and fast-growing shopper base, which at this time includes over 105,000 energetic accounts8, and represents c.1.3% of your entire US fairness choices market (institutional and retail) by quantity traded9, whereas being ranked by Barron’s because the second finest on-line brokerage platform for energetic merchants.
Collectively, tastytrade supplies formidable retail merchants with the training and confidence to commerce in spinoff merchandise, while tastyworks supplies them with a robust, fashionable and easy-to-use buying and selling platform to utilise this data.
tastytrade is headquartered in Chicago with c.145 workers. tastytrade opened brokerage operations in Australia in 2019 and is within the strategy of launching in Canada as a part of its worldwide growth technique.
In September 2019, tastytrade launched dough, a mobile-first brokerage agency radically difficult the established order and altering wealth creation and the Quiet Basis, a knowledge science-driven, funding advisory service launched in 2018. tastytrade can be an ‘incubator’ of different fintech firms, together with, The Small Change, a futures trade platform targeted on retail merchants launched in 2020, and investor in Zero Hash, a crypto-currency infrastructure supplier.
For the monetary 12 months to 31 December 2020, tastytrade delivered income of $116.2 million11 (up 44% year-over-year; 31 December 2019: $81.0 million), Adjusted EBITDA of $54.1 million12 (up 43% year-over-year; 31 December 2019: $37.8 million) and revenue earlier than tax of $49.0 million (up 5% year-over-year; 31 December 2019: $46.5 million), with development in energetic accounts of 85percent13 over the identical interval, reflecting each structural sector development and tastytrade’s continued disruption of the US retail market. tastytrade’s gross belongings had been $200.5 million14 as at 31 December 2020, with a regulatory capital requirement of c. $0.5 million reflecting its agency-only brokerage mannequin.
2. Background to and Causes for the Acquisition
IG’s technique
IG is an award-winning, multi-product buying and selling firm offering retail, skilled and institutional shoppers with entry to buying and selling alternatives in over 17,000 monetary markets. Because the world’s #1 supplier of contracts for distinction (CFDs)15 and a longtime participant within the international trade (FX, foreign exchange) market, IG is already one of many foremost buying and selling platforms in its Core Markets, together with the UK, EU, Australia and Singapore.
Past its Core Markets, IG’s technique is targeted on its Vital Alternatives portfolio, comprising the US, Japan, Rising Markets and Larger China geographies, in addition to the institutional channel via IG Prime and the European trade traded spinoff market via Spectrum.
IG has had a presence within the US retail buying and selling market since 2007 via Nadex, the Chicago-based derivatives trade for US and abroad merchants. Nadex affords a variety of merchandise together with binary choices, name spreads and knockouts. In 2019, IG launched OTC FX buying and selling for retail shoppers via its retail international trade seller (RFED) enterprise. IG additionally operates within the US via DailyFX, a free information and analysis useful resource for FX, commodity and index buying and selling.