US venture fund Accel Partners has placed an investment round with online foreign exchange service OzForex.
Terms of the deal were not disclosed.
The foreign exchange platform based in Sydney and founded in 1998 by Matthew Gilmour allows people to buy up to 50 foreign currencies to speed overseas transactions, although it did not permit trading. It operated in New Zealand, Canada and Britain under country-specific domain names.
It was the second minority investment the Silicon Valley fund has made in Australia, after the $US60 million round it placed with Sydney software-tools maker Atlassian in July.
The latest joint round with Carlyle Group closed last Friday, the same day accounting firm Deloitte listed OzForex among Australia's 50 fastest-growing companies. It was the first time Carlyle and Accel have closed a deal together.
According to Techcrunch, Accel's previous Fund IX that closed five years ago included Facebook, which raised $US500 million; Atlassian was invested in the current $US520 million round, Fund X.
OzForex will use the money to expand overseas, build offerings and buy complementary services.
Macquarie Private Wealth, which bought a majority share in 2007, and the founders retained control of the business.
Neil Helm, who will stay on as OzForex's chief executive officer, said the combined board that included representatives from Accel and Carlyle, Macquarie and founders, was well-placed to build an offshore presence.
"We are really excited by this because we think Accel has a set of complementary skills with Carlyle Group," Helm said. "And when you combine that with Macquarie it creates a board with global reach in technology and financial services and that's a potent blend of skills on the board to drive the growth."
OzForex provided "white label" services for the likes of ING Direct and Macquarie that allowed them to offer global currency buying under their own brands but powered by its platform.
Major competitors included banks and eBay company, PayPal, which provided ways to buy goods and services in foreign currencies.
OzForex may also expand its online marketing campaign geared around search engines to the real world, Helm said.
"Clients normally deal with big banks and not realise there are alternatives provided by specialists who can price the transaction more tightly than the banks," he said.
Accel partner Ryan Sweeney said the funds were attracted to OzForex because of its location at the gateway to Asia and it was predicated on an online business model. Sweeney characterised Accel's investing as a "thesis approach", choosing areas that would generate wealth and then finding the market leaders. For instance, OzForex beat out 50 other global competitors for the late-stage venture round, he said.
"We decided a year to 18 months ago that the [foreign exchange] space was a category we wanted to take a look at and ... saw a lot of trading companies that we didn't like - trading was too risky from an investment standpoint," Sweeney said.
The fund then turned its attention to businesses that enabled foreign currency transactions and hit upon OzForex.
He said the management team in place was a "solid group of guys and we liked that they were 90 percent online".
"You look at the other companies operating in the space around the globe there aren't many others operating [mostly] online," he said.
"We believe [OzForex's is] s a more scalable platform - there's 10 years of development technology behind it - and a very deep risk management system and we believe that online financial services will pick up and build acceptance around the world and these guys are set to capitalise on this trend."
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