VCM Global Asset Management Invests USD30m in MillTechFX
VCM Global Asset Management (VCM) has made a USD30 million investment in MillTechFX, the fintech arm of the Millennium Global Group, to accelerate disruption of the world’s USD6 trillion a day Forex market.
VCM is buying a significant stake after its private equity arm found itself paying steep FX transaction fees on a recent multifamily property acquisition in Germany. Consequently VCM, which is expanding internationally and is looking to make more investments in Europe as well as the Americas, went into the market to find a better solution.
“When we came across MillTechFX with its transparent digital FX platform and access to comparative multi-bank rates in a transparent and easy way, we were so surprised by it that we thought hang on here, this is big, this company is going to challenge the status quo and disrupt the market, we should invest. MillTechFX can solve a lot of companies’ problems, reduce operational burden and save a lot of money for many players out there ranging from institution to corporates and asset managers,” says Tom A Vukota, CEO of VCM, which bought 45 Wyndham branded hotels for USD215 million in the US recently.
Indeed, according to recent research by the IMF, ECB and University of Geneva, most corporate clients are paying 50bp on any FX transaction worldwide. VCM, for example, had to pay 38bp in FX fees on its German multifamily acquisition.
In contrast, MillTechFX, a sister-company of Millennium Global Investments, one of the largest independent specialist currency managers in the world, can substantially reduce those costs while lower operational burden. MillTechFX typically saves customers anywhere from 50 per cent to 95 per cent on FX costs.
“The sad reality is that the global FX market lacks transparency, is riddled with hidden charges and can cost companies millions of dollars annually if they are trading significant volumes,” says Santiago Tello, Managing Director at VCM and Holding Company Board Member of MillTechFX. “Only the largest and most sophisticated institutions typically benefit from direct access to low-cost rates and enjoy relationships with multiple banks. For the rest of the planet, the truth is that millions of companies are paying excessively worldwide.”
MillTechFX targets a USD120 trillion a year segment of the global FX market and works with Asset Managers, Institutions and Corporates that need to transact anywhere from USD50 million to over USD25 billion annually. It is planning to use the USD30 million raised to accelerate growth by investing in new products, expanding internationally as well as enhancing its credit, operating capital and marketing.
“We see MillTechFX as a solid investment at a reasonable valuation with lots of growth potential,” says Tello. “We believe in its simple and transparency pricing model at a reduced FX cost to clients with access to a multi-bank panel of the world’s largest counterparties in the FX market. This includes some of the world’s largest banks, providing live comparison prices. The platform also provides a transaction cost analysis to help bring transparency to a traditionally opaque market” he adds.
“In the 21st century, it does not seem logical that companies pay so much on FX transactions in such an opaque way. This is why we went and looked for a solution. Ultimately, we co-invest our own capital alongside our investors. We seek solid companies and when we came across MillTechFX, it just made perfect sense,” says Vukota.