According to regulatory filings made today with the London Stock Exchange for publicly listed online FX & CFD broker, London Capital Group Holdings plc (LCG), the firm issued a trading update with Q1 trading revenue reported at £4.7M.
LCG cited in the update that March had muted volumes in relation to the prior two months in the quarter which had seen higher results, comparatively. Average daily spread betting and CFD trades in the quarter were down 11 per cent on the prior year, decreasing from 24,298 to 21,586, according to the update.
2014 has been a challenging start for several brokers despite the strong comeback in January over December for trading volumes, the continued drop in volatility and exodus of senior Forex persons, and the fragmentation of the swap market in the US as a result of SEF trading, as well as the crisis in Ukraine, have all weighed on pushing volumes lower as volatility vanished -creating fewer trading opportunities.
Note for 15M GBP Planned, GLIO Holdings to be Main Subscriber
The Group's net cash resources (including amounts due from brokers) were £18.1m on March 31, 2014, and following the payment of settled claims in Q1 2014, the FOS claims provision on March 31, 2014 was £1.5m. The loss before tax for Q1 2014 was £0.4m (2013 continuing operations: £0.7m profit).
Events like these placed a strain on the company, and may have been the driver for LCG to announce today that it is planning for a convertible loan note to be issued for £15M, with the amount to be subscribed in majority by GLIO holdings limited, a special purpose vehicle (SVP) venture capital firm led by Charles-Henri Sabet, who has extensive experience investing in online trading platforms.
For the deal to go through, following required regulatory approval and acceptance from shareholders, an extraordinary general meeting – among other things – that would still need to take place and therefore could still be months away. Nonetheless, such an infusion of capital could provide the needed boost for LCG following the recent expenses it incurred, as mentioned above and following its challenging 2013 year.
According to sources familiar with the development as explained to Forex Magnates following the news, Mr. Sabet would take on a key role within LCG and considering that he has previously worked with the firm's CEO Kevin Ashby while at Saxo Bank, that element of familiarity could help as working with new people can often bring unexpected changes. If this deal goes through, rather than change the business, the infusion of funds could help accelerate the existing strategies already in place, and under the help of Mr. Sabet's guidance and the funds from his firm GLIO, as the return on investment would be mutually beneficial for both sides.
LCG also migrated its Capital Spreads business and all white labels partners, some of which include Saxo Bank, TD Direct Investing, and Bwin.party, to its new core Trading Platform , and will focus on adding new trading tools and applications for its clients with a release already scheduled for some time this month.
The company had just reported its full year 2013 results with a loss, as covered by Forex Magnates earlier last month.
