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Currency king Gustavson happy to be home again

Peter Gustavson, who sold his Victoria-based Custom House Global Foreign Exchange to Western Union in 2009 for $370 million, is two years into a new foreign exchange venture with EncoreFX.
Paul Lennox and Peter Gustavson founded Encore FX and cater to small- and medium-sized businesses.

Peter Gustavson, who sold his Victoria-based Custom House Global Foreign Exchange to Western Union in 2009 for $370 million, is two years into a new foreign exchange venture with EncoreFX.

And he’s found the old formula of keeping the customer happy still pays off handsomely.

“In the FX industry, there is a lot of automation especially for small and medium-sized enterprises,” Gustavson said. He noted banks all have good online products and keen pricing. “Where we have differentiated [ourselves] is the banks have stopped giving personal service.”

Gustavson said anyone can get on a computer and buy $100,000 US.

“But the question is when to buy it and what is your exposure, what is your currency risk and what are your foreign-exchange opportunities?” he said. “We get to know these businesses, we find out what their risks are and what their opportunities are, and only then do we come and say: ‘This is what your FX strategy could be.’ ”

It’s the kind of service the larger banks reserve for their biggest foreign-exchange clients.

“We have taken those sophisticated products and taken them down-market and made them available to small- and medium-sized enterprises,” Gustavson said.

Most of the company’s clients are importers and exporters doing $10 million to $50 million in foreign exchange transactions a year.

It’s the kind of personal service that built Custom House, founded in 1992, into a desirable acquisition target and Western Union gobbled it up in 2009. At the time, Custom House was considered one of the world’s largest non-bank foreign-exchange companies, doing billions of dollars in transactions.

Gustavson and former Custom House executive Paul Lennox founded EncoreFX in the spring of 2015, after their five-year, non-compete agreements expired.

EncoreFX opened with five Canadian locations, 30 employees and a Victoria administration office.

There are now 12 locations in Canada, Australia and New Zealand and the company has about 120 employees.

This year, Gustavson expects EncoreFX, which has just over 1,000 corporate customers, will do in excess of $3 billion worth of transactions.

“This is very much an encore performance,” said Gustavson, whose name adorns the University of Victoria’s School of Business after a $10 million donation. “It’s very much déja vu.”

But there is a difference the second time around.

“Other than I’m a lot older, the last time we started we had very little money and no experience. This time, we have access to a considerable amount of capital and everybody here has lots of experience.”

Many of the employees and management have come from Custom House.

EncoreFX added Fraser Jeffries as its senior vice-president of global business development. Jeffries established Custom House as a leader in Australia, New Zealand and Singapore.

Gustavson said Jeffries has, in turn, hired the same managers he hired 16 years ago for EncoreFX locations in Melbourne, Brisbane, Sydney and Auckland.

While there is a lot of duplication in the mix, Gustavson said there is a new energy in this company and it has reinvigorated him. “I never thought I’d step back into this,” he said. But he felt he had to after seeing what had become of Custom House.

Western Union started to contract out work offshore, cut back its Victoria operation and all decisions were being made at head office instead of the company people who were dealing with clients.

“There were a lot of people I worked with, these were my friends, and they were saying they pined for the good old days where we could put customers’ interests first and not head office’s,” Gustavson said.

“That was probably the motivation to say: ‘Hey, maybe we should look at getting back into the ball game.’ ”

EncoreFX now has Canadian locations in Victoria, Vancouver, Calgary, Edmonton, Saskatoon, Winnipeg, Ottawa and Toronto. Gustavson expects further expansion down the road, perhaps into the U.S.

“We are committed to growing the head office here in Victoria and making it a significant company in town and as an employer of choice,” he said. “The U.S. and Europe were good markets for Custom House, and they will be good markets for Encore at some point.”

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