An Irish company has announced details of a joint venture with one of the most influential players in the Internet investment community, in a move aimed at providing Internet financial trading services in the Far East. Cognotec, an Irish-based foreign exchange software specialist, has taken a 42 per cent stake in Forexbank, a new venture in which Softbank has a majority shareholding.
Softbank is valued at over $13 billion (€12.41 billion), and is best known for its significant shareholdings in Internet success stories Yahoo, E*Trade and Geocities. It has now taken a 52 per cent stake in Forexbank, an Internet-based foreign exchange and money-market trading service aimed at Japanese and Korean financial institutions.
Softbank approached Cognotec last year after it had made tentative explorations into the Japanese market. Softbank wanted to shift its investment emphasis to the expected demand for electronic foreign exchange facilities in the emerging e-commerce environment. Forexbank was established following a capital investment of $5 million.
The new entity will act as a one-stop-shop for Internet-delivered foreign exchange for the banking industry. It will exploit Cognotec's electronic dealing products to support real-time executable foreign-exchange prices at branch and corporate level.
Mr Brian Maccaba, Cognotec chairman, expects Forexbank's services to be rolled out to 50 per cent of Japanese banks within three years.
Cognotec put its turnover at $20 million, and has been profitable since 1991. Mr Maccaba says the company will not be profitable for the next two years at least, as Cognotec continues to invest heavily in its Internet infrastructure. Forexbank's revenue model is transaction-based, and according to Mr Maccaba, projected revenues cannot be estimated until initial product roll-out and takeup begins.
Last year, Cognotec received a $30 million investment from New York investment firm Warberg Pincus, when it took a 25 per cent stake in the company. Since then it has increased its Dublin workforce from 60 to 110, and according to Mr Maccaba, a positive response from the Japanese market could lead to further staff increases of around 35 per cent.
