Hedging for Growth? Two Case Studies

FX hedging is usually framed as insurance: a way to stop currency moves eroding a margin you have already earned. That framing is right as far as it goes, and for most businesses it is the whole job. But it sets a low ceiling on what a hedge is for.

Both of the clients in these two case studies came to Jackson Swiss Partners holding an FX position that, on paper, looked like a liability. In one case, a contract win was too large for the balance sheet to justify hedging by conventional standards. In the other, an existing hedge sat with a broker whose own finances were unravelling. In neither case was the fix simply to manage the risk. It was to restructure it into something that funded the client’s next move.

Case study one: winning a contract too big for the balance sheet

The situation: a contract four times the size of the business

A UK-based defence supplier won a Ministry of Defence contract worth EUR 300 million, carrying a 40% profit margin. It was a transformational deal for a company with turnover under GBP 70 million and cash reserves under GBP 3 million. The contract’s scale, nearly four times the company’s annual turnover, sat far outside what its balance sheet would normally be expected to support.

The challenge: every bank and broker declined the hedge

The size of the resulting GBP/EUR exposure, set against the company’s modest balance sheet, led every bank and broker approached to decline the hedge. Each rejection was based purely on balance sheet size relative to contract value, without regard to the underlying commercial strength of the deal itself. Left unhedged, currency movements over the life of the contract threatened to erode, or wipe out, the client’s 40% margin.

How Jackson Swiss Partners helped: building the credit case on the counterparty

Rather than accepting the market’s balance-sheet-only view, we assessed the full commercial picture, recognising the Ministry of Defence as an exceptionally reliable counterparty with guaranteed payment obligations. Our legal team reviewed the confidential contract to confirm it was watertight, then used that to build the credit case to FX partners for why the client deserved approval despite its modest balance sheet metrics. Alongside the hedge, we sourced a GBP 10 million borrowing facility, giving the supplier the liquidity to pay its own vendors upfront and deliver the contract without cash-flow strain.

The outcome: a 40% margin locked and the contract delivered on schedule

The client locked in its 40% margin on the EUR 300 million contract, protected profitability against currency volatility for the duration of the project, and delivered on schedule. A deal the market had declined to touch became a platform for growth.

Case study two: turning a broker’s collapse into growth capital

The situation: profitable, acquisitive and short of cash

A large, privately owned UK importer with a growth-by-acquisition strategy: turnover of roughly GBP 90 million and GBP 8.5 million in operating profit, but only just over GBP 1 million cash at bank. Operating in a highly competitive, commodity-driven industry where cash is king, the client’s ability to fund future acquisitions of smaller competitors, and to borrow on favourable terms, depended on protecting and building its cash reserves.

The challenge: a large position with a broker in trouble

The client had built up a large, out of the money FX position with its existing broker, Argentex LLP, the FCA-regulated UK subsidiary of AIM-listed Argentex Group plc, and a firm that was itself showing signs of serious financial strain. That left the client dependent on an increasingly unstable counterparty for a sizeable position, exposed to margin-call risk, and sitting on losses that offered no obvious way to fund the acquisitions central to its growth strategy.

How Jackson Swiss Partners helped: novating out and restructuring the trade

• Novation away from Argentex, ahead of its collapse. We sourced the client a large, margin-call-free FX hedging facility and novated its negative position away from Argentex entirely, completed days before Argentex LLP entered special administration on 21 July 2025. This removed the client’s counterparty risk and margin-call exposure before that risk had the chance to crystallise.
• Cash paid upfront. The replacement trade was structured so the client was paid GBP 1 million upfront and walked away from the original losses entirely, rather than simply exiting the old position at a loss. Similar structured trades followed, generating a further GBP 1 million-plus in cash, again on an interest-free basis.
• Priced against the client’s own budget rate. In exchange, the client accepted a new forward contract that was out of the money against prevailing market rates. Because it was set at the client’s own internal budget rate, the business remained profitable on paper and the trade did not damage its real economics.
• Gradual close-out ahead of settlement. Rather than letting the out of the money forward run to maturity, we closed it out gradually in stages ahead of the settlement date, so no open position remained by the time settlement would have occurred and the liability was never crystallised.

Together, the novation, the upfront cash and the staged close out converted a stuck, at-risk FX exposure with a weakening counterparty into non-repayable cash in the client’s hands, funding its acquisition-led growth strategy without adding interest-bearing debt to the balance sheet.

Why the timing mattered: the Argentex collapse

Argentex was a UK foreign exchange risk-management and payments business, listed on AIM as Argentex Group plc and trading through its regulated subsidiary Argentex LLP, serving roughly 2,000 corporate and institutional clients. In mid-2025, sharp and sustained dollar volatility drove margin and collateral calls on its hedging book faster than its capital base could absorb. Its CFO and several board members resigned, and the firm took an emergency loan to stay afloat. The FCA imposed a Voluntary Requirement restricting new business in late June 2025; the firm then missed a regulatory liquidity threshold, and a second, stricter Voluntary Requirement in mid-July forced it to halt all client trading. A proposed rescue takeover collapsed once insolvency became unavoidable, and on 21 July 2025 Argentex LLP entered special administration, with FRP Advisory appointed as Joint Special Administrators. The listed parent group followed into standard administration days later, and its shares were suspended from AIM.

For clients still holding open positions with Argentex when it collapsed, the outcome has been long delays and uncertain recovery rather than a quick payout. Client and safeguarded funds are legally ring-fenced but not guaranteed to be complete once reconciled; e-money and payment balances carry no FSCS protection at all; and even eligible balances under the client-money regime are capped, with the FSCS itself describing the number of clients likely to recover full value as extremely limited. A related High Court ruling has since confirmed that clients cannot claim priority for value locked in open, in the money forward contracts when those are closed out by administrators. Such claims rank as ordinary unsecured claims alongside everyone else’s.

Because Jackson Swiss Partners had already novated the client’s position away from Argentex and onto a stronger, margin-call-free counterparty, the client was not among those left with funds tied up in the special administration. It walked away holding cash, not a claim.

The outcome: cash in hand, and nothing left with the failed broker

The client secured over GBP 2 million in non-repayable cash in total, GBP 1 million on the replacement trade and more from the structured trades that followed, to fund its growth strategy, avoided the liabilities the underlying forward contracts would otherwise have created, and, by moving ahead of Argentex’s collapse, avoided the delays, cost deductions and recovery risk now facing clients left behind with the failed broker.

The common thread

Neither of these clients came to us asking for growth capital. One needed a hedge nobody else would write; the other needed to get out from under a failing broker. In both cases, the growth funding was a by-product of solving the underlying risk problem properly: assessing the real credit story behind a deal rather than the balance sheet ratios alone, and structuring the replacement position to work in the client’s favour rather than simply closing it out.

That is the answer to the question this article set out to ask, whether hedging can fund growth rather than only defend it. Hedging is not only a defensive tool. Handled with the right commercial judgement, it can be one of the more efficient ways to fund a company’s next stage of growth, without adding debt, and without waiting on a bank.