This is an overview of Mergermarket proprietary intelligence in the payments sector in EMEA over the last three months, featuring existing opportunities in the market. Snapshot is the new name for a Preview. 

M&A activity in the payments sector in Europe, the Middle East and Africa (EMEA) is expected to start to recover next year as the region continues to transition to mobile payments and dealmakers adapt to more settled financing environments.

“As the long-standing trend towards digital payments continues, particularly in regions like Southern Europe, the Middle East and North Africa, we can expect continued growth and further consolidation in the payments sector,” said Mariagiovanna Di Feo, EMEA Payments Lead in the Financial Services practice at Bain & Company.

An uptick in activity would be warmly received by dealmakers in a space where volume has fallen off a cliff in recent years due to plummeting valuations for technology companies and macroeconomic instability.

So far this year, there have been exactly 100 deals in the payments space across EMEA with a total value of EUR 6bn, according to Mergermarket data. This compares with 121 deals totaling EUR 9.5bn last year. As recently as 2019, total deal value reached EUR 44.9bn, the data shows.

The year’s landmark deal was Brookfield’s GBP 2.2bn (EUR 2.6bn) takeover of London-listed Network International [LON:NETW] in June. CVC and Francisco Partners had made a joint offer to acquire the Dubai-based card processor in April before Brookfield stepped in.

Other notable deals include UK-based Rapyd’s USD 610m purchase of Prosus’ [AEX:PRX] business-to-business payments specialist PayU GPO in August and SumUp’s EUR 285m Sixth Street Growth-led funding round in December.

Any spike in dealmaking will likely be underpinned by private equity firms, said a fintech advisor at a bulge-bracket bank. Still armed with considerable stores of dry powder, sponsors are expected to ramp up deployment activity in the space next year as interest rates and company valuations begin to stabilise, he said.

Meanwhile, further competition in the sector will encourage banks to “continue to rethink their participation in the payments value chain” through strategic partnerships, said Di Feo.

Indeed, the payments segment represents by far the largest revenue opportunity within the fintech sector for all large-cap investment banks, the fintech banker said.

Pipeline deals include Stockport-based payments solutions provider Takepayments. Owner Grovepoint Capital is exploring a sale of the GBP 60m revenue business next year, Mergermarket reported.

Similarly, majority-owner CORDET Capital is weighing the sale of a minority stake in Trust Payments. CORDET initially weighed a full sale of the GBP 20m EBITDA multichannel payments firm last year.

Meanwhile, UK-based foreign exchange specialist Moneycorp, whose EBITDA grew 85% to GBP 70.4m in 2022, is also expected to come up for sale next year as owner Bridgepoint finalises its exit strategy. It has a score of 34 out of 100, according to Mergermarket‘s Likely to Exit (LTE) predictive algorithm.*

A number of smaller deals are expected to support the large-cap activity in the coming months, the fintech banker said. For example Irish digital banking and payments platform CR2, which generates EUR 20m-EUR 30m in annual revenues, has hired PwC to guide it through a potential sale process next year.

London-based consumer payments specialist Curve, meanwhile, is looking for acquisition targets of 30 employees or less to expand into the Gulf Cooperation Council (GCC), Latin America and APAC regions, CEO Shachar Bialick told Mergermarket.

Next year, payments companies might seek to save costs, particularly in areas such as compliance, by forging strategic alliances with generative artificial intelligence (AI) providers, said Bain’s Di Feo.

*Mergermarket’s LTE predictive analytics assign a score to sponsor-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing or a deSPAC transaction. 

Proprietary Intelligence:

pawaPay (28/11/2023)

pawaPay, a UK-based fintech that provides mobile payments services in sub-Saharan Africa, is considering raising fresh capital from a strategic investor to accelerate growth, CEO Nikoai Barnwell said. The company, which generates more than EUR 1m in monthly net revenue, maintains a constant dialogue with investors that could help it scale its platform and contribute to a “rainy day” fund, Barnwell said. If it does decide to raise money in the next 12 months, it would likely seek at least EUR 20m to bring its growth to full speed, said the CEO.

Tilta Fintech (24/11/2023)

Berlin-based business-to-business (B2B) payments infrastructure provider Tilta Fintech plans to raise EUR 7m-EUR 8m in a Series A funding round next year, CEO Jan Enno Einfeld said. The company plans to invite Europe-focused venture capital firms, with experience of scaling fintech or e-commerce companies, to participate in the round, which it hopes to close before the 2024 summer break, Einfeld said.

Payten (8/11/2023)

Asseco South Eastern Europe (ASEE) [WSE:ASE], a Poland-based software and information technology (IT) services provider, is continuing its acquisition hunt after a recent deal in Portugal, ASEE group business director Adam Wolszczak said. ASEE, which recently acquired Portuguese payments company Ifthenpay via its own payments subsidiary Payten, is in talks with targets in Latin America and North Africa and is starting to look for its first opportunities to acquire businesses in markets where it does not have operations, the executive said.

Mollie (2/10/2023)

Mollie, a Dutch e-payments software firm, will study opportunistic acquisitions in Europe, VP France Philippe Daly said. The group could analyse smaller targets in the payment service provider (PSP) sector in Europe, particularly those which provide complementary products and technologies, Daly said. It would also be interested in client portfolios in a specific European country, he said. Mollie is well financed and has cash available to seize opportunities, he added.

Lyf (29/09/2023)

Lyf, a France-based mobile app for instant payments, could accelerate growth with opportunistic buys, Deputy CEO and co-founder Frederic Leclef said. The fintech company, which has not identified potential targets, would consider the acquisition of a smaller payment specialist, Leclef said. Such a target could accelerate the company’s strategic development, in line with past acquisition of Neos, he added. Lyf acquired “scan and go “ mobile app Neos in 2019, which had 10 employees, and knows how to integrate a target, he added.

Castles Technology (28/9/2023)

Castles Technology [TPE:5258], a Taiwan-based payment solutions provider, is reviewing its strategic options, including acquisitions, in order to reach USD 1bn in revenues in a few years, CCO and EMEA CEO Jean-Philippe Niedergang said. The group has already identified small providers of hardware installation and maintenance services targets to acquire in western Europe, in countries where the group already has a presence, which will bring field services to its clients, Niedergang said. Such targets will have less than 100 employees and revenues of around USD 7m to USD 8m.

Yavin (22/9/2023)

Yavin, a Paris-based point-of-sale (POS) solutions provider, is assessing potential bolt-on acquisitions, co-founder and CTO Alfred Bourely said. The company is interested in companies such as payment terminal specialists in France and could make an acquisition in the coming months, he said. Yavin is approaching breakeven, and still has funds from its previous fundraising rounds to finance organic and inorganic growth in the next months, Bourely said.

SumUp (15/9/2023)

SumUp Payments, a UK-based payments and financial services provider for merchants, is keen to continue expanding its product and geographic footprint through mergers and acquisitions, Global Head of Financial Planning and Analysis Philip Rottschafer said. The Bain Capital-backed company, which works with 4 million merchants across 36 countries, has a dedicated M&A team continuously looking at opportunities to diversify its revenue streams, Rottschafer said.