EML Payments to buy European fintech Sentenial for $109m

EML Payments to buy European fintech Sentenial for $109m

EML Payments managing director and group CEO Tom Cregan.

Prepaid card solutions provider EML Payments (ASX: EML) expects to be processing $90 billion annually worldwide following a European acquisition announced today.

The Brisbane-based company has entered a binding agreement to buy a 100 per cent of Ireland-headquartered Sentenial Limited and its subsidiaries, including open banking product Nuapay, for 70 million euros (AUD$108.6 million).

EML will issue around $48.2 million worth of new shares for the scrip component, and will pay more than $60 million in cash.

The deal also has a 40 million-euro ($62.1 million) earn-out component, and comes just over a year after EML made its £131.5 million (AUD$263.5 million) acquisition of Prepaid Financial Services (Ireland) Limited (PFS).

Investors appear encouraged by the announcement, with EML shares up almost 9 per cent at $5.60 each in early trading.

EML was attracted to Sentenial's customer base across banking, corporate and software industries, including four of the UK's top seven banks and some of the largest merchant acquirers in Europe.

The group expects combining its platform with Nuapay will help deepen customer relationships, enter new industry verticals and diversify its revenue streams.

EML managing director Tom Cregan says the acquisition of Sentenial will be the next evolution for the company, having transitioned over the years from primarily a gift-card company to a group with a diverse revenue base across multiple prepaid products.

"The acquisition of Sentenial will be the next evolution for EML, as we transition into a broader payments business by adding instant account-to-account (Open Banking) payments into our suite of solutions for current and prospective customers," Cregan says.

"EML supports thousands of prepaid programmes globally, and our platform is how our customers interact with us. Sentenial operates an enterprise-grade payments platform processing over 45 billion euros per annum, and it's, therefore, a similar business to EML but servicing a different customer set with different payment types. 

"The net result of bringing the companies together allows EML to increase our total addressable market by expanding our product suite, and we see a number of opportunities to cross-sell account to account payments into existing EML customers, and vice versa."

The company also plans to leverage Sentenial into the Australian and North American markets, and Cregan is upbeat about bringing Sentenial's founder and CEO Sean Fitzgerald into the group, as well as the rest of his team.

"Sentenial is a European business today, and we will be working to extend their platform to our other regions in the coming 12-18 months," says Cregan.

"Sean and the team have attracted an extraordinary calibre of international clients who trust its innovative products range, and the entire EML family looks forward to welcoming the Sentenial team, which is currently comprised of 60 full-time employees.

"Geographically, with its principal office in Ireland and offices located in London, Paris, Brussels and Krakow, Sentenial fits well with EML."

Fitzgerald says Nuapay's mission is to be "the best way to pay and get paid".

"The revolution in payments caused by open b and real-time payments is rapidly building momentum globally, and we are hugely excited by this opportunity to move to a global scale as part of EML," he says.

"From the moment EML approached us we've been impressed by their vision, ambition and growing ecosystem.

"Joining EML and becoming listed on the Australian Stock Exchange as a result of this transaction is an exciting step for our organisation, which will help us rapidly scale and deliver a broader and more complete set of solutions to our clients and partners."

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