FRNT Financial Inc. is pleased to provide a business update as macro and cryptocurrency-market conditions improve. The Company is seeing a significant uptick in business pipeline beyond what has been seen historically, though experiencing volatility in the timing of revenue realization. While such volatility is to be expected as the industry emerges from aggressive bear-market conditions, the Company believes the revenue-generation potential of the business has re-rated and that recurring, more predictable quarterly figures are on the horizon.
Advisory & Consulting
FRNT Financial has entered into a number of engagements, advising crypto-related corporate clients with unique financing needs and structures. These include a mix of M&A mandates, minority financings, and structured financings. The Company is engaged in over $500 million in notional mandates. While execution risk remains, several mandates are in advanced stages and are expected to conclude within the next 9-12 months.
Lending Origination
In the recent quarter, FRNT saw an influx of indications from prospective borrowers of fiat currencies, collateralized by digital assets. Client indications currently amount to upwards of USD equivalent $100 million in notional, with FRNT typically earning origination fees and spreads on such transactions, if executed.
Trading Services
Claims Trading: FRNT remains engaged and advising FTX claims holders following the 2022 bankruptcy. The Company was one of the most active firms in consulting around such transactions in 2023. With a minority of claims having traded to date, FRNT believes the opportunity remains with the bankruptcy estate now adding further clarity to the liquidation timing.
Derivatives: While regulated OTC-derivatives trading was particularly impacted by the bear-market conditions of the last two-years, the Company has seen renewed interest in such structures. FRNT intends to launch an augmented version of its historical ‘SEM-Trade’ derivatives-platform as this business-line returns in the coming quarters.
Spot Services: After a year where many core spot trading clients restructured or dissolved, FRNT is seeing an influx of onboarding of new clients, achieving levels not seen since 2021.
Quote from Management
“The business of FRNT is emerging from a unique, disruptive period where the institutional adoption of digital assets was put on pause due to high-profile disasters in the industry and a depressed macro environment,” said Stéphane Ouellette, CEO of FRNT Financial. “As clear changes in sentiment are emerging in key regions and regulatory clarity is improving, FRNT is experiencing an incredible increase in demand for its services. FRNT is one of the few institution-focused businesses in the industry that has been able to stabilize operations after an incredibly difficult period. We further expect, in the coming quarters, as the industry normalizes, to see less volatile and more predictable quarterly revenues.”
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