The FinTech industry which is the combination of finance and technology is increasing profitably on a year-on-year basis and the country’s biggest FinTech transaction was with Airwallex with US$100 million series C funding in in March 2019. The segment is most dominated by the buy now and pay later sector. There are more than 620 FinTech companies active in Australia and their number has seen an 8 per cent rise since September 2018. The investors have invested approximately US$100 million in the fintech industry in Australia in H12019 and more deals are expected to have been executed in the second half of 2019.
The largest Fintech transaction in the region was valued at US$2 billion and it was the merger of NCF Wealth Holdings in China.
On 15 January 2020, The S&P/ASX 200 Information Technology sector was last traded higher at 1501.6 points, with a rise of 0.37 per cent compared to the last close. The S&P/ASX 200 benchmark index last traded at 6,994.8.2 points, increased by 0.37 per cent from its previous close.
Let us discuss a stock from FinTech Industry i.e. EML Payments Limited and its recent updates:
EML Payments Limited (ASX:EML)
EML Payments Limited is a provider of payment solutions in the salary packaging industry. EML Payments offers funding and disbursement card programs for healthcare reimbursements, commissions pay-outs, gaming pay-outs etc. The company has offices in North America, Australia, The United Kingdom and throughout Europe. The company serves customers located across the globe.
EML Seven Year agreement with NSW Health
On 14 January 2020, the company announced that it has awarded seven years of contract with NSW Health to be its provider of branded General-Purpose Reloadable card programs for employee salary packaging. This agreement underpins the company’s leading position in the salary packaging industry. Post 100 per cent transition from the incumbent provider to EML, the company expects NSW Health to transfer roughly 49,000 employees participating in salary packaging to anyone of the company’s programs.
By adding this agreement, the company expects to provide services to more than 300,000 benefit accounts by April 2022. On transition, the total annual gross domestic volume (GDV) for the salary packaging vertical is expected to be nearly $2.3 billion.
Retail Entitlement offer
On 4 December 2019, the company has announced that it has completed fully underwritten one for five accelerated pro-rata non renounceable retail entitlement offer. Under the offer, around 26 million of company’s share will be issued at a price of A$3.55 per EML share to raise roughly A$93 million.
The eligible retail shareholders have supported the offer with the applications received aggregating to roughly $64 million. Under the Retail Entitlement Offer, the shortfall will be allotted to the sub-underwriters.
EML Multi-year agreement with Simon Mall Group
On 29 November 2019, the company has reported that its wholly owned subsidiary EML Payments USA, LLC, has entered into multi-year pact with Simon Property Group (NYSE: SPG) a global shopping mall operator. The agreement helps the company to distribute payment card products through B2B distribution and notified Simon shopping malls in USA.
The few highlights of the agreement are as follows:
- The agreement signed with SPG is subject to the terms and conditions and the agreement expires on 14 December 2024.
- The company expects to launch the programs under agreement within 90 days.
- Under the agreement, the company expects Gross Domestic Volume to revenue to be in line with the group’s non-reloadable card programs.
- The SPG would offer the company’s product in more than 200 USA properties via its website.
- Under the agreement, the company is unable to estimate accurately the future gross Debit Volume.
In order to know the operational highlights for FY 2019 click here
Appointment of Company Secretary
On 26 November 2019, the company has announced to the appointment the Sonya Tissera – Isaacs, (AGIA, ACIS) as Company Secretary. Mrs Tissera has a wide range of experience in corporate governance in unlisted and listed public companies. She holds Bachelor of Business degree and is a Chartered Secretary.
Mrs Tissera will jointly work with Mr Paul Wenk, who is the General Counsel of the Group and Company Secretary. Both of them will perform their duties as Joint Company Secretaries.
EML Announced acquisition of Prepaid Financial Services and Equity Raising
On 11 November 2019, the company has announced the acquisition of Prepaid Financial Services (Ireland) Limited (PFS). A few highlights of the acquisition are as follows:
- The company acquired PFS, a multi award winning European provider of white label payments and banking as a service technology for an enterprise value of £226 million Plus an earn-out component of up to £55 million.
- The transaction and acquisition cost will be funded through:
- A fully underwritten non-renounceable entitlement offers to raise roughly A$183 million.
- A placement which is fully underwritten and intended for raising $67 million from existing and new institutional shareholders.
- A Fully underwritten debt facility of A$175 million and a Vendor Placement of roughly A$77 million at the Offer Price.
- After the acquisition, the company will become, one of the leading FinTech enablers in digital banking domain and it is expected that the EML Payement Ltd will process $18 billion GDV in Financial year 2020.
- The acquisition with Prepaid Financial Services will provide the EML entry into 8 new markets and further penetration into Spain, France and United Kingdom.
- Post-acquisition, the £226 million enterprise value represents 17.5x FY20 Earning before interest tax and Dividend (EBITDA), and also 14.0x FY20 EBITDA after taking into account net run-rate synergies.
- The net run rate synergies are estimated to be approximately $6 million per annum.
Stock Performance of EML Payments Limited
The stock of EML was last traded at $5.250 on ASX on 15 January 2020, up by 0.382 per cent from its previous close. The company has approximately. 325.42 million outstanding shares and a market cap of $1.7 billion. The stock has generated a positive return of 64.94 per cent in the last six months and positive return of 24 per cent in last three months.
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