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TradeStation is joining forces with Quantum FinTech Acquisition Corporation to go public on the NYSE as it looks to increase its marketing budget.
TradeStation Group announced on Thursday that it would go public via a merger with a special purpose acquisition company (SPAC) Quantum FinTech Acquisition Corporation (NYSE: QFTA). Upon completing the deal, the combined company would be valued at $1.43 billion, with TradeStation parent Monex retaining 80% of the outfit. According to reports, TradeStation’s existing management team will also remain unchanged.
The combined company plans to use the generated funds to increase its marketing spending. This is to gain customers as well as hire employees to lead the research and development of new products. The deal will make available $316 million in cash before paying expenses – in the absence of the redemption of any Quantum Fintech public shares.
Intricacies of the TradeStation Planned Public Merger Deal
When broken down, the total cash outlay includes $201 million of cash held in the trust account of the SPAC and an additional $115 million as private investment in public equity (PIPE), or a private sale of Quantum stock. Some of the institutional investors involved in the private investment are Monex Group and Galaxy Digital LP – each investing $50 million. Others include XBTO Ventures, LLC and Appian Way Asset Management.
Pursuant to the merger deal, a new subsidiary of TradeStation will merge with Quantum FinTech. This essentially means the latter will become a wholly-owned subsidiary of TradeStation. Furthermore, each Quantum FinTech share in possession of PIPE investors and sponsors will switch out for one TradeStation common share. However, Quantum shareholders can choose to earn more than one TradeStation share if they do not redeem the public shares.
Chairman and CEO of Quantum FinTech John Schaible weighed in on the development. According to Schaible, TradeStation emerged at the top of businesses in the fintech sector regarding value proposition. As he put it:
“There are numerous reasons why TradeStation is, in our judgment, the most attractive company we looked at in the fintech/financial services sector, and we looked at quite a few. TradeStation owns its core trading platform technology, and it executes and clears its customer trades across all of the major asset classes it offers.”
Schaible believes that the high level of control TradeStation exerts over its technology and operations gives the company added advantages. These include agility and flexibility in its business operations, as well as in further growth potential.
TradeStation’s Brief History
The SPAC transaction will most likely close in the first half of 2022. Furthermore, TradeStation will list on the New York Stock Exchange (NYSE) under the ticker ‘TRDE’. TradeStation is a financial technology platform offering self-clearing online brokerage services for a range of products. These include stocks, equity and index options, futures options, and cryptocurrencies, among others. The company first began offering crypto trading to its customers in May 2019, and went into partnership with exchange ErisX. Also, part of the deal entailed TradeStation integrating ErisX’s order book into its subsidiary, dubbed TradeStation Crypto.