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While EML Payments has been on an aggressive acquisition path for the past 18 months, its latest announcement makes previous transactions look like small change.
The fast-rising Brisbane outfit has entered into a binding agreement to acquire London-headquartered Prepaid Financial Services (Ireland) Limited (PFS) for an upfront value of £226 million (A$423 million), plus an earn-out of up to £55 million (A$103 million).
The sum warps the group's last major acquisition of UK-based Flex-e-Card Limited (FEC) in May for £21.6 million ($40.5 million), as well as more recent transactions in July valued at around $6 million.
To fund the acquisition of PFS, a European provider of white label payments and banking-as-a-service technology, EML will raise money through a $183 million entitlement offer, a $67 million placement and a $77 million scrip issue to PFS' continuing management shareholders.
The equity raising will be issued at $3.55 per new EML share, representing a 7.3 per cent discount to the last closing price.
In addition, EML also has a new fully underwritten multi-currency $175 million debt facility of which $130 million will be drawn.
"The acquisition of PFS continues to consolidate EML's market position as one of the largest FinTech enablers in digital banking and prepaid globally," says EML managing director Tom Cregan (pictured), who intends to take up his entitlement in the offer.
"PFS is highly complementary to EML's existing solutions suite and adds digital banking and multi-currency offerings to our existing suite, while expanding our global market footprint and ability to cross-sell PFS's solutions."
From its origins as a reseller of pre-paid cards in 2008, PFS has evolved to provide payments and digital banking capabilities, e-wallets and payout/distribution programs, regulatory Electronic Money Institution status and flexible software.
These features allow companies to deliver feature-rich transactional banking and other payment services to their end-user base without becoming regulated entities.
The group currently operates in 24 countries and supports more than 26 currencies, with forecasted revenue and EBITDA of $84 million and $24 million for FY20.
EML Payments jumped 11 spots in this year's Brisbane Top Companies list and its share price has more than doubled in the past 12 months. In today's announcement, the company stated it was on track to delivering 28-43 per cent EBITDA growth in the current financial year.
This would put EBITDA in the range of $38.5-42.5 million while revenue will be in the area of $116-132 million.
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