FX Alliance IPO: Strong Performance After Downsizing Range

FX Alliance (NYSE:FX) priced their initial public offering last Wednesday, raising just over $60 million for the company, which provides a foreign-exchange trading platform for institutional clients. After selling 5.2 million shares at $12 per share, investors saw a nice first day pop: shares initially opened at $13.60 and topped out at $13.74 — a gain of roughly 15%.

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FX Alliance, which was founded in 2006, serves as an independent platform for electronic foreign-exchange trading. They deal primarily with institutional clients, and boast over 1,000 to date. The company has offices worldwide and currently generates significant revenues from overseas clients. In addition, the FX Alliance has some very high profile clients, including top asset managers, hedge funds, and other Fortune 500 companies.

The company had previously received funding from Technology Crossover Ventures, which focuses its investments in information technology companies. However, generating demand for this offering was by no means easy. The $12 per share price came in significantly below the initial range, which was $13.50 to $15.50. Other recent IPOs, including ChemoCentryx (NASDAQ:CCXI) and Synacor (NASDAQ:SYNC), have also been forced to downwardly revise their ranges, as investors simply are not showing the necessary demand at desired levels.

In FX Alliance’s case, the crisis in Europe is likely what forced it to lower its range. Trading volumes have been down because of the crisis, and investors could have been skeptical that FX’s exposure to the European crisis would cause revenues to decline. Despite having to lower the range, though, both investors and company executives can be happy with the stock’s performance thus far.

The 15 percent pop seen on the first day of trading has since held up. As of Monday’s close, the stock remains above $13.80, implying that demand continues to exist. As markets remain connected across economies all over the globe, FX Alliance should be well positioned to grow.

Bank of America Merrill Lynch (NYSE:BAC) led the deal, along with Goldman Sachs (NYSE:GS), Citigroup (NYSE:C), and JPMorgan Chase (NYSE:JPM).

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To contact the reporter on this story: Matthew Kovner at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com