Singapore Exchange To Bolster Foreign Exchange Offering With MaxxTrader Acquisition

Singapore Exchange, or SGX, continues to bolster its foreign exchange product offering by acquiring MaxxTrader for USD 125 million. An additional performance based earnout of up to USD 35 million is available if targets are achieved post acquisition. The deal represents 8.3 times 2020 revenue and is expected to be earnings per share accretive in year 1. Management noted compound annual revenue growth of close to 15% for MaxxTrader, which is above overall revenue growth for the exchange, but its operating margin is lower. Further cost guidance is expected to be provided at the June year-end fiscal 2020 result. We retain our existing forecasts and fair value estimate of SGD 11.20 per share, as the acquisition is less than 2% of the exchange’s market capitalization. Our thesis on the exchange is unchanged as we remain positive on its strategy in broadening its financial products.