Over the course of the last few years, Playtech (LON:PTEC) has been trying to enter the niche of the retail FX trading services as well as launching quite a few binary options brands. Today we are happy to inform you that nearly a month has passed since Playtech has purchased CFH Group. In this article, we are going to take a look at the deal in the very detail, examine the possible outcomes and the reasons for this acquisition.
What is the deal all about?
CFH Group consists of a few different branches. The main business unit of this group is composed by a prime brokerage, CFH Clearing, a company that serves other retail brokers by providing them with the liquidity and various trading-related technology. This is a great deal for Playtech, as this way it can power-up its retail FX brands.
CFH Systems is another important ingredient in CFH Group. It is a trading platform that can easily by white-labeled and is, actually, very advanced when compared to the most popular platform in the retail FX industry – MT4.
Finally, the 3rd part of the deal is about transferring an educational portal called Tradimo. This page is currently available in five languages: English, Russian, Arabic, Chinese and German. The website is estimated to get roughly 300,000 unique visitors according to SimilarWeb data.
As for the revenues, CFH Group has shown great dynamics in driving its 2015’s revenue of $19.7 million to a $29 million in just a year. Considering the nature of the business, CFH Group’s EBITA for 2015 accounted for nearly 30% of its revenues – $5.7 million. Playtech has paid a total of $120 to seal the deal, which is around 21 EBIT of CFH Group.
Why Playtech wanted it?
First of all, it does seem that CFH Group was a good buy. It has shown a strong growth over the last year and it has been integrated with quite a few broker and banking clients. This will provide Playtech with a great B2B income stream in the retail FX sector.
Next to this, it is clear that instead of launching new types of casino products, like bitcoin gambling, Playtech looks into investing more in its financial unit. CFH technology seems to be a great fit here, as it will provide great platforms for retail FX brands.
Apart from that, Playtech has been having some bad luck acquiring FX brokerages in the past, as the regulators have seen the company more gambling-oriented than trading. With this purchase, Playtech might stand more chances when it comes to future acquisitions of the retail brokers.
Finally, even though it seems minor, Tradimo can be an important asset for Playtech. It can become a strong content base and a lead generating machine for the company.
Why did Playtech have to do it?
Started with the acquisition of a large FX brokerage – Safecap LLC and its main brand, markets.com, Playtech has been having a bad luck adding additional brokers into its portfolio. Firstly, the regulators refused to continue with Playtech’s acquisition of the second largest UK CFDs brokerage, Plus500, and then another regulator declined to approve Playtech’s deal with AVA FX.
This has led Playtech to aquire more companies in its core business – gambling. Even though it has purchased the companies that are involved in both online and offline gambling, Playtech still has failed to offer any sort of bitcoin gambling software.