Capital.com, a London-headquartered global broker, is taking steps to purchase the client assets of forex and CFDs broker, OvalX, Finance Magnates has learnt.

"Under the terms of the agreement, OvalX will offer some of its existing retail and professional clients the opportunity to transfer their accounts to Capital.com. This will ensure continuity of service for OvalX clients and allow them to continue trading, without disruption," both companies said in a joint statement shared with Finance Magnates on Wednesday.

Speaking in the statement, Peter Hetherington, the Group Chief Executive Officer at Capital.com, said the brokerage is "excited to welcome consenting OvalX clients to Capital.com and look forward to supporting them in their trading journeys.” In his comment, Luca Merolla, the Chief Executive Officer at OvalX, noted that transfer of clients will be completed "over the coming weeks."

To support the new deal, Capital.com in the statement noted that it has appointed Niamh Byrne, the former Head of UK B2B2C Sales at IG Group, as its Head of UK and Ireland. Byrne, who spent 14 years at IG Group, boasts of over 15 years of industry experience.

OvalX's new deal with Capital.com comes almost two weeks after the brokerage firm told Finance Magnates that it was exploring “strategic options” including a possible merger or asset sale. This was after news emerged that the company might be planning to shut down its operations. While an industry source informed Finance Magnates that the broker has started to relieve some of its team members of their duties, OvalX in a statement mentioned an ongoing “consultation process with some employees.”

The OvalX Backstory

Guru Captial, a Swiss private equity firm, took over ETX Capital in October 2020. However, new details have emerged that Jump Capital, a US-based venture capital firm, funded the acquisition. As a result, London-based Monecor Limited, which runs OvalX, is controlled by Jump Capital whose partner, Saurabh Sharma, joined Monecor’s Board.

Furthermore, Finance Magnates understands that Ryan Nettles and Luca Morella, two former Swissquotes executives who ran Guru Capital and helped in arranging the ETX takeover, were to get equity stake in ETX Capital from Jump Captial on the condition that they hit certain business targets at ETX Capital.

But in what turns out to be a complex story, Finance Magnates gathered that Monecor in 2021 acquired Italy-based Oval Money, which was run by Guru Capital, for about $1.5 million after the savings app went bankrupt. However, at the time, the deal was packaged as an opportunity to introduce Oval Money’s young users to ETX Capital’s trading features.

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OvalX Loses Profitability under Guru Capital

With Guru Capital charged to run ETX Captial by Jump Capital, the equity firm rebranded ETX Captial to OvalX in February 2021. In addition to this, Finance Magnates learnt that stakeholders from the bankrupt Oval Money were drafted to operate OvalX.

Under the first year of Guru Capital's leadership of OvalX, Monecor reported a pre-tax loss of £9.2 million for the fiscal year 2021 that ended in December 2021. In its prior record, the brokerage had generated £428,000 in net profits. Furthermore, the firm’s trading revenue dropped -24% to £24.1 million, which is down from £31.7 million in the previous year even as the operating loss reached £9.2 million compared to a profit of £595,000 in the fiscal year 2020.

“The Italians who all came from Oval Money together have done the exact same to ETX as they did to their previous company - taken the VC money and declared it bankrupt,” an industry insider told Finance Magnates.

‘Business As Usual’?

Meanwhile, Finance Magantes understands that Jump Capital is no longer interested in funding OvalX, which likely explains the need for the new deal with Capital.com. Regardless, funding from last year from Jump Capital means that OvalX still has some capital base.

For Luca Merolla, the CEO of Oval Money, the company is “well-capitalized,” and “it’s business as usual, as he noted in a recent statement shared with Finance Magnates.

"The global economy has suffered, and the wider industry experienced a significant reduction in trading volumes in 2022, and we were no exception,” Merolla explained.

He added, “As a result, we continue to explore various strategic options. I want to assure our clients that the OvalX trading support services and customer experience is operating on a business-as-usual basis, and we will maintain the standards that our customers have become used to."