Stonex Group Inc. · NASDAQ:SNEX

Stonex — INTL FCStone — Merger or Acquisition (2020)

21 slides from Stonex's merger presentation, 2020

  1. Slide 1: Investor Presentation: Acquisition of GAIN Capital Holdings, Inc.

    INVESTOR PRESENTATION Acquisition of GAIN Capital Holdings, Inc. NASDAQ: INTL

  2. Slide 2: Disclaimer

    Disclaimer Forward Looking Statements This presentation contains “forward-looking statements” within the meaning of "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-lo

  3. Slide 3: Transaction Summary

    Transaction Summary  INTL FCStone Inc. (“INTL”) to acquire GAIN Capital Holdings, Inc. (“GCAP”), for $6.00 per share, or approximately $236mm equity value  Represents 1.12x GCAP’s TBV per diluted share as of 12/31/19 Terms and  100% cash consideration Conditions  GCAP’s $60mm convertible notes d

  4. Slide 4: INTL FCStone Overview

    INTL FCStone Overview Business Summary Key Stats(1)  INTL connects clients with the global markets across asset classes -- providing execution, FINANCIAL METRICS post-trade settlement, clearing and custody  Operating Revenue: $1,118.2mm  Clients use INTL’s electronic platforms, market intelligenc

  5. Slide 5: Business Segment Overview

    Business Segment Overview CLEARING AND COMMERCIAL PHYSICAL GLOBAL SECURITIES EXECUTION HEDGING COMMODITIES PAYMENTS SERVICES Net Operating $246 (36%) $62 (9%) $109 (16%) $142 (21%) $126 (18%) Revenue ($mm)(1)  High-touch, value-  Full range of trading  Network covers over  Market maker for  Com

  6. Slide 6: Value Proposition and Long-term Strategy

    Value Proposition and Long-term Strategy  Connectivity to 36 derivative exchanges, every securities market, every FX market and bi-lateral Key sources of liquidity for OTC Marketplace  INTL is cross-product: listed derivatives, securities (equities and fixed income), FX and payments Advantages and

  7. Slide 7: GCAP Company Overview

    GCAP Company Overview Overview  GCAP was founded in 1999 with the intention of providing traders with low cost access to foreign exchange markets  Since then, GCAP has expanded its product offering and global reach, and now provides ~130,000 retail and institutional investors with access to OTC an

  8. Slide 8: GCAP Business Segment Overview

    GCAP Business Segment Overview Retail Futures 2019 Net $194mm $40mm Revenue  Business is conducted primarily through the Company’s FOREX.com and City  Offers execution and related services for exchange-traded futures and futures Index brands on options on major U.S and European exchanges  Provide

  9. Slide 9: Transaction Rationale

    Transaction Rationale  Expected to Increase net operating revenue by nearly 30% by adding a new retail trading segment – Increases INTL’s customer balances by $929mm to ~$4bn  Naturally addresses the key challenges of GCAP’s performance as a standalone public company – insufficient scale and signi

  10. Slide 10: Pro Forma Revenue Mix and Financial Highlights

    Pro Forma Revenue Mix and Financial Highlights ($ in millions, except per share amounts) INTL GCAP Combined 9% 11% 14% 18% 21% 16% $685 $186 7% $870 LTM 12/31/19 36% 21% Net Operating Revenue Mix(1) 13% 89% 28% 16% Clearing and Execution Services Securities Clearing and Execution Services Securities

  11. Slide 11: GCAP Deepens and Broadens INTL's Platform Across Both Customer and Product Axis

    GCAP Deepens and Broadens INTL’s Platform Across Both Customer and Product Axis = INTL Listed Derivatives Securities Swaps FX = GCAP  Clearing and  Top Third  Rates  FX and execution  FX Payments  Risk mgmt.  Commodities SME Commercial consulting N/A (GIRROX) Clients  Clearing and  Clearing

  12. Slide 12: GCAP's 2019 Performance Driven by Poor Market Conditions; Low Correlation with INTL

    GCAP’s 2019 Performance Driven by Poor Market Conditions; Low Correlation with INTL Business Reduces Combined Revenue Volatility Adjusted Net Revenue(1) Historical Monthly ADV & RPM Outcomes (Jan’15-Dec’19) 2015-2018 2019 Retail Futures / Other $402 RPM $383 $353 $50 $46 $278 $42 $234 5.0 7.0 9.0 11

  13. Slide 13: Sources & Uses and Pro Forma Capitalization

    Sources & Uses and Pro Forma Capitalization Sources & Uses Sources Uses ($mm) ($mm) 0 0 Cash on Hand $2.6 Offer Value of Equity $236.2 New Senior Secured Notes 350.0 Redeem GCAP Convertible Notes 92.0 Estimated Transaction Fees and Expenses 24.4 Total Sources $352.6 Total Uses $352.6 Pro Forma Lever

  14. Slide 14: Significant Anticipated Expense Synergies

    Significant Anticipated Expense Synergies  INTL anticipates $32mm of cost synergies from a combination with GCAP  $21mm and $30mm impact to pre-tax income in years 1 and 2 reflecting realization of anticipated synergies and increase in fixed costs  Estimated restructuring costs of $6mm to achieve

  15. Slide 15: Expected Capital Synergies Subsidize Purchase Price

    Expected Capital Synergies Subsidize Purchase Price While Maintaining a Strong Capital and Liquidity Profile OVERVIEW EXPECTED TIMING EXPECTED SYNERGY Merging INTL’s IFL and UK UNITED KINGDOM entities into GCAP’s UK 3-6 months $85mm entity Merging local SINGAPORE subsidiaries 3-6 months $5-10mm Extr

  16. Slide 16: Acquisition is Expected to be Accretive to Earnings

    Acquisition is Expected to be Accretive to Earnings ($ in Millions) Conservative View on GCAP’s Revenue Retail Segment Revenue Drivers GCAP Adjusted Net Revenue Year 1 Projection Year 2 Projection 2019 Retail Futures Other 2018 3-year Average Quarterly Data Points (’17 – ’19) $200 $353 Street Street

  17. Slide 17: Anticipated Cost and Capital Synergies Result in Attractive Purchase Price Multiple

    Anticipated Cost and Capital Synergies Result in Attractive Purchase Price Multiple ($ in Millions) Deal Price $6.00 (x) Fully Diluted Shares 39.4 Offer Value of Equity $236.2 At (+) Converts Due 2022 92.0 Closing Enterprise Value $328.2 2019 Repeat Year 1 GCAP Pro Forma Adjusted EBITDA $8.2 (1) $29

  18. Slide 18: Overview of Potential Cross-Selling Opportunities

    Overview of Potential Cross-Selling Opportunities  While projections exclude the revenue synergies from cross-selling opportunities, INTL’s broad product offering will provide GCAP clients with a valuable expansion of products  The broadened product offering has the potential to extend GCAP’s clie

  19. Slide 19: Non-GAAP Reconciliations

    Non-GAAP Reconciliations INTL 12/31/19 LTM EBITDA ($ in millions) Three Months Ended Fiscal Year Ended Twelve Months Ended December 31, September 30, December 31, 2019 2018 2019 2019 Net income from continuing operations $16.3 $18.2 $85.1 $83.2 Interest expense 33.8 33.0 154.7 155.5 Depreciation and

  20. Slide 20: Non-GAAP Reconciliations

    Non-GAAP Reconciliations GCAP Adjusted EBITDA ($ in millions) Fiscal Year Ended December 31, 2019 2018 2017 2016 2015 Net (loss) / income from continuing operations ($60.8) $28.0 ($14.9) $35.3 $10.3 Depreciation and amortization 17.1 19.7 17.0 13.9 11.1 Purchased intangible amortization 8.8 14.2 14.

  21. Slide 21: Non-GAAP Reconciliations

    Non-GAAP Reconciliations GCAP Adjusted Net Revenue and Adjusted Net Operating Revenue ($ in millions) Fiscal Year Ended December 31, 2019 2018 2017 2016 2015 Net revenue $233.9 $358.0 $278.2 $382.8 $401.6 Class action settlement 0.0 (5.4) 0.0 0.0 0.0 Adjusted net revenue $233.9 $352.6 $278.2 $382.8

INTL FCStone — Merger or Acquisition (2020) on 6ix