Bluebox Insights – April 2016

April 6, 2016

Mark Hardwicke, Head of Corporate Finance takes a look at the growth of  M&A in the money
transfer, FX and Fintech sector:


The UK money transfer industry has undergone significant changes over the last few years. The industry has seen an unprecedented amount of consolidation with high deal values and EbIT multiples being paid by both trade players and private equity houses alike. Over the last 10 years the sector has rapidly consolidated with the number of money transfer businesses reducing in Europe from 2,500 to approximately 350.


M&A activity in the money transfer space remains high. Last year saw the completion of two significant transactions. Firstly, with the sale of Hifx, acquired by Euronet for a total consideration of £145m representing a 19x EbIT multiple. The second, much larger, deal was the sale of Moneycorp by the RBS Special Opportunities Fund to private equity house Bridgepoint Capital for £212m. More recently we have seen the purchase of Currencies Direct by Corsair Capital and Palamon Capital for in excess of £200m representing a 24x EbIT multiple.


In addition to full acquisitions there have also been a number of large investments both in to traditional money transfer businesses, such as the 40% investment into World First by FTV capital. More significantly in the rapidly growing and developing Fintech space that is disrupting the industry we have seen significant investment. Over the last few years we have seen Accel Investments invest $40m in WorldRemit, Greycroft Investment acquire a $10m stake in Azimo and, most notably, Andreessen Horowitz’s $58m investment in TransferWise giving the company a staggering billion-dollar valuation.


Undoubtedly these Fintech disrupters have had a major impact on the industry, bringing in new competition and business models. This is fuelled, in part, by the inflow of cash to the fintech industry in general. Last year, investments into fintech start-ups quadrupled, from over £2 billion in 2013 to £8 billion in 2014. The question now is, what happens to the slow adaptors such as Western Union and high street banks that are still charging up to 8% for international transfers versus companies like XendPay where you pay what you want?


As the traditional markets have seen growth, driven by an increasingly mobile middle class purchasing homes and moving abroad as well as the further globalisation of business, Fintech have been taking advantage of the remittance markets. Traditionally untouched by non-banking providers due to the smaller transaction sizes (typically around £200) low touch online providers have been able to gain significant market share in the ever growing £290 billion-dollar FX remittance market.


Money transfer and Fintech is very much an industry the team at Bluebox are focused on, driven by the team knowledge and expertise in this sector as well as our excellent relationships with many trade and private equity firms around the world who are active in the space.