The stock market debut of ThinkMarkets is now in question after the Canada-listed blank check company, FG Acquisition Corp., withdrew its preliminary prospectus. Although the firm has assured that it will reapply its reverse merger deal, the retail FX/CFD market has already seen many stories of failed public offerings.

What's Next for ThinkMarkets IPO?

Think Financial Group Holdings Limited, the operator of the ThinkMarkets brand, officially announced in May of this year that it would merge with a Special Purpose Acquisition Company (SPAC) to debut on the Canadian TSX stock exchange.

According to the information at the time, the debut was set to take place in July 2023. By June, it seemed that everything was heading in the right direction. At the end of the month, SPAC partner shareholders accepted the acquisition of ThinkMarkets, and meanwhile, the broker introduced a copy trading app to its offerings, preparing for the listing. However, three months have passed since the announced date, and ThinkMarkets is still not a publicly traded company.

This week, FG Acquisition Corp. announced the withdrawal of the preliminary non-offering prospectus, officially filed on 12 May 2023. The company has assured that it intends to continue working with Think Financial to finalize the agreement. However, it has failed to submit the final prospectus within the statutory 180 days and will need to submit a preliminary prospectus again.

"As such, the Corporation is withdrawing the Prospectus and intends to re-file a new Prospectus as soon as it is able, which will contain details of the Qualifying Acquisition, and continue pursuing the Qualifying Acquisition with Think Financial," commented FG Acquisition Corp. in an official statement.

Finance Magnates asked ThinkMarkets representatives for a comment. "The withdrawal of the prospectus is an administrative filing due to the reasons set out in the press release and the 180-day window. We are still committed to completing the transaction and will be refiling a new prospectus shortly," Harley Salt, the Chief Operating Officer (COO) at ThinkMarkets, responded in an email.

Two Times a Charm and Million-Dollar Losses in the Background

For Think Financial, this would not be the first unsuccessful announcement of going public. In 2020, Finance Magnates reported that ThinkMarkets planned a $300 million initial public offering (IPO) in Australia. The company wanted to raise an additional $100 million in funding, but the project died at the preliminary announcement stage.

In the background of the postponed IPO, ThinkMarkets' results for 2022 came to light. For example, the British subsidiary TF Global Markets (UK) Limited achieved higher revenues, but its operating profit fell by 7%. The company's million-dollar losses were also shown in the preliminary prospectus published in May, which showed that over two years from 2021, ThinkMarkets lost nearly $21 million.

However, ThinkMarkets remains positive about its debut in Canada and assumes that it will take place in 2024.

"We will refile a new prospectus shortly, and complete the deal when the final prospectus is approved. The company has already secured minimum investor commitments to complete the deal.," the COO added. "As a business that is in operation for over 12 years we could not be more thrilled to take the company public and showcase our many achievements over the years . We have a strong pipeline of products, expansion plans and portfolio of opportunities lined up for 2024 once we are a public entity."

12 Years of Retail Brokers IPO Promises

Based on current information, we should assume that the planned TSX debut will eventually occur. However, if this didn't happen, no one in the industry would be surprised.

The last few decades of plans by various brokers and retail companies in the FX/CFD sector have shown that very often, becoming a public company ends only in announcements. The list of publicly traded firms is relatively short and includes only CMC Markets, IG Group, Plus500, Interactive Brokers, Swissquote, Naga Markets, and XTB. The last successful debut occurred in 2016 when XTB entered the Warsaw Stock Exchange.

In 2020, eToro announced its intention to sign an SPAC deal, but to this day, it has not been finalized. However, the list of uncompleted IPOs and SPAC deals is much longer.

According to Andrew Saks, the Head of Media & Analysis at ETX Capital, there could be two reasons for the small numbers of exchange -listed FX brokers: "It is impossible to go public if a broker hosts its client base on third party servers and given that around 85% of the brokers in the retail market do that, this is a large barrier."

In contrast, others do not want to share their financial details. "For example, in the United States, publicly listed firms have to state in their quarterly and annual reports how they conduct their business, whether they use an A book or B book method, and the internal handling of order flow may not be something many firms want to disclose publicly," Saks added.