The deal allows the e-banking and international payments group to complement its strategy to develop a fast-growing corporate segment, providing additional corporate clients and cross-selling opportunities for the expanding range of products through their existing sales channels.
HermexFX, the acquired business, offers international payment services to a predominantly corporate client base through a personalised service offering.
Following a strategy to consolidate smaller, attractive market participants, Equals Group expects the deal to be immediately earnings enhancing as it extracts value from increasing economies of scale.
Kyrillos Kyriacou, the current CEO and founder of HermexFX, has joined the Equals Group as an employee and has agreed to subscribe £1 million, for 851,063 new ordinary shares of 1p each in the firm at an issue price of £ 1.175 per share, subject to a two year lock-in period.
Ian Strafford-Taylor, Chief Executive Officer, commented:
“This acquisition further demonstrates the ambition of the Group to be a dominant force in the payments market. Utilizing our proprietary technology and outstanding operations teams we are able to absorb businesses like HermexFX extremely efficiently. The acquisition also shows our commitment to pursuing our strategy of achieving cost efficiencies through scale. We are delighted to have attracted such a high quality, service-led business with an excellent client base, and we welcome the team from HermexFX to the Equals family.”
Prior to changing the name to Equals Group, FairFX acquired City Forex for £6 million payable in cash. The deal, which took place in 2018, was also set to enhance earnings for FairFX, increase economies of scale with its approximately 2,000 business and 8,000 private client customers. Cross-selling FairFX products to City Forex customers was a top priority. City Forex made a revenue of £4.4 million in Q3 2017 (YoY) from turn-over of £570 million which generated an EBITDA of £0.7 million and a PBT of £0.3 million. The company had assets, excluding client cash and grossed up debtors and creditors, of £4.1 million.