How the Rich Invest: Owen Kerr is making huge profits in forex with Pepperstone

Profits at Owen Kerr’s foreign exchange broker Pepperstone have surged in the 2017 financial year, as the company enjoyed a large increase in clients from Asia.

Pepperstone’s earnings before interest and tax (EBIT) surged 99 per cent to a record $96.7 million from $166 million revenue. Net profit for the firm reached $71.2 million after the Melbourne-based company paid about $25 million in tax, documents recently filed with the corporate regulator revealed.

The 2017 results were more than double from the previous year, during which Pepperstone had made a net profit of about $34 million from $96 million revenue and EBIT of $48 million.

It also means Pepperstone’s valuation could now exceed $1 billion based on similar companies listed on stock exchanges around the world.

ASX-listed OFX is trading on a price to earnings multiple of 17 times, while London-listed CMC Markets is trading on a 12 times multiple.

Applying a multiple of 10-11 times earnings to Pepperstone would value the privately held company at far more than $1 billion.

Financial Review Rich List member Kerr and his British business partner Joe Davenport co-founded Pepperstone in 2010 and had been exploring the merits of an ASX float before selling a chunk of the business to private equity firm CHAMP in March last year.

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Source: How the Rich Invest: Owen Kerr is making huge profits in forex with Pepperstone | afr.com