The payments aspect of the fintech space is gathering pace.
Irish bank AIB has joined forces with First Data Corporation to acquire a majority stake worth 95.5pc in Irish fintech player Payzone, from existing shareholders including the Carlyle Cardinal Ireland Fund (CCI).
The joint venture will be 75pc owned by AIB and 25pc owned by First Data. The deal values Payzone at an enterprise value of €100m.
‘For AIB, this transaction means acquiring significant fintech capability and Payzone’s substantial payments footprint in Ireland’
– COLIN HUNT
Payzone is a leading branded provider of specialised payment services in Ireland facilitating consumer payments by cash, card and card-not-present for everyday consumer needs.
Its platform provided online and mobile payments for some 300,000 registered consumers in more than 7,000 retail outlets across Ireland.
The Payzone business, which reported EBIDTA (earnings before interest, taxes, depreciation and amortisation) of €8.3m for last year and which has assets worth €59m, will continue to be led by CEO Jim Deignan and CFO Nigel Bell.
The joint venture will pay €61m in cash, debt of €25m which will be paid on completion of the deal and €11m which will be payable upon the achievement of a number of conditions.
Digital transformation of a traditional bank
The strategic move by AIB will give it significant capabilities to compete in the fintech space in the post-PSD2 and open banking economy, said CEO Colin Hunt.
“For AIB, this transaction means acquiring significant fintech capability and Payzone’s substantial payments footprint in Ireland,” he said.
“This will allow AIB to continue to evolve and enhance our customer offering, enable us to pioneer digital ecosystem products and services, and represents growth potential. We are delighted to partner again with First Data Corporation in setting up this new joint venture and look forward to working with Payzone management to further build on their success.”
AIB has been no slouch when it comes to pushing the digital envelope. It was an early adopter of mobile payments through platforms such as Apple Pay and Android Pay and last year became the first Irish financial institution to launch industry-standard open application programming interfaces (APIs), allowing trusted third parties to interface with its platform to offer services to customers.
In an interview with Siliconrepublic.com, AIB CIO Tim Hynes said that 95pc of customer engagements with the bank are now digital.
“This development is a positive step for Payzone and a vote of confidence in the future of the business,” said Deignan. “We see significant opportunity to grow our footprint in the fintech sector and this can only be enhanced further with the backing and support of our new shareholders, who bring deep industry expertise to make things happen. The team at Carlyle Cardinal Ireland, which originally invested in Payzone in 2015, has worked very successfully with us to help develop the business and to support our continued growth. We thank them for their great support and investment over that period.”
Payzone processes 125m transactions annually for more than 100 client companies and operates Ireland’s largest retail payments network with at least 11,500 points of sale throughout the country.
CCI representatives Peter Garvey and Robert Easton of The Carlyle Group and Daragh Lane of Cardinal Capital Group will step down from the Payzone board upon completion of the transaction, which is subject to approval from the European and Irish competition authorities.
“Working with the fantastic management team at Payzone, CCI’s investment in innovation and new product development has helped to accelerate the growth of the business and to transform it into one of Ireland’s most successful multi-channel payment solutions platforms,” said Peter Garvey.
“Net revenue and EBITDA have grown by 40pc and 70pc respectively, since we invested. Payzone still has numerous opportunities for further growth, which can now be realised with the support of the new investors. This is the fund’s third exit and once again demonstrates the benefits of active, growth-focused private equity investment for ambitious Irish businesses.”
Daragh Lane added: “When CCI acquired a majority shareholding in Payzone four years ago it processed 61m transactions a year, delivering a gross transaction value of €1bn to its customers. Today it processes 125m transactions a year delivering in excess of €2bn of value to its customers and is a well-established Irish fintech organisation that drives significant innovations across many traditionally cash-based markets.”