State Street buys Currenex for $564 million
State Street Corporation has stunned the foreign exchange (FX) market with its purchase of multi-bank platform Currenex. Although it has been an open secret that Currenex had effectively sought to engineer an auction for itself, the price paid appears to have left industry participants astonished.
“I am having trouble breathing. ICAP got a steal on EBS,” was the immediate reaction of the global head at one major FX trading institution. EBS, the dominant middle man in the spot FX market, was sold by its mainly bank consortium owners for around $800 million in April 2006. While the market may have flourished since, the price paid for the far smaller Currenex at first glance looks extremely rich.
That said, market sources have commented that there would be a good fit between State Street’s FX Connect platform and Currenex. FX Connect has a strong foothold in the institutional space, even though its technology is described as outmoded. Currenex has built a strong reputation with its technology, which some participants have suggested would prove expensive for it to maintain. Combining the two may well prove a masterstroke.
“Being able to offer our customers innovative trading tools through FX Connect and Currenex fulfills our goal of delivering leading-edge foreign exchange capabilities to meet growing market demand,” said Stanley Shelton, executive vice president and head of State Street Global Markets in a press release.
“The two platforms are extraordinarily complementary with almost no overlap. Once this transaction closes, we will move quickly to integrate Currenex’s technology with Global Link, our multi-asset class trading platform, and continue to invest in the platforms to deliver the most complete and technologically advanced set of products available in the market,” he added.
Cliff Lewis, chairman and chief executive of Currenex looks set to go down in FX history as a miracle worker, having turned around the company’s fortunes dramatically in just a few years. Commenting on the deal, Lewis said: “This move leverages the strengths of two innovators who share a similar strategic vision of creating best of breed and flexible electronic trading solutions.”
It is believed that State Street captured Currenex after fairly hefty competition from another major financial player, keen to get into the FX space. How much this drove up the price will no doubt be debated in dealing rooms across the globe.
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