When is a long-term investment not an investment? It’s not really a trick question, though it has metamorphosed into one for AIM-listed financial trading supplier and operator TechFinancials after the company was forced to announce in late July that the promised £300,000 investment from Hong Kong-based IBID Holdings had failed to materialise, hence ending the formative joint venture between the two companies.
The deal was initially announced in February and would have seen the pair launch a consumer-facing financial trading offering in Hong Kong, 51% owned by TechFinancials and 49% by IBID.
The intention of the JV was to match the quality of the TechFinancials platform to the marketing expertise of IBID. As part of the deal, the £300,000 was supposed to be paid by IBID to TechFinancials as initial investment capital. But the money never turned up according to the latter, and in July TechFinancials informed the market that IBID was in breach of the agreement and that it was considering legal action.
TechFinancials said in a statement: “Importantly, the company confirms that the termination of the agreement will have no material impact on the results for the current financial year and that trading of both its B2B and B2C divisions remains in line with market expectations.”
The non-executive chairman at TechFinancials is Chris Bell, ex-chief executive at Ladbrokes. In the last results statement from the company Bell said TechFinancials would be setting up IBID Financials to back the JV. The statement added that development work had already commenced to integrate TechFinancials trading platform into the IBID’s online marketing systems and that the JV was expected to “contribute significantly to the group’s profit milestones with the injection of marketing expertise and provision of working capital by IBID”.
The deal with IBID was prefigured by another JV with the owners of another Hong Kong-based company called Optionfortune. That JV has launched a company called Dragon Financials which started trading in January.
TechFinancials was founded in 2009 as a binary options software developer based in Cyprus and Israel by current chief executive Asaf Lahav and chief operating officer Jeremy Lange. In its float document the company said it services 48 binary options brands including one of the market leaders 24Option. Its top three customer accounted for 23% of total revenues in the six months to June 2014. It claimed its client base represented circa 18% of the binary options market. The company also operates the OptionFair.com site.
TechFinancials raised $3.5m from its share placing. Among its major shareholders is Gigi Levy, ex-chief executive at 888 with just under 3% of the shares in issue.