Wirecard to be selective acquirer as it looks to increase international scale, executive says
Wirecard AG [WDI:DE] will be selective as it scouts for tuck-in acquisitions across Europe, Southeast Asia, the Middle East, Latin America and North America, said Executive Vice President and Managing Director Susanne Steidl.
The Bavaria, Germany-based banking software company’s recent purchase of Citi’s [NYSE:C] prepaid card services unit marked its first foray into the US market and cemented its position as a global player, Steidl said. Now its strategy is to scale its business on all of the continents in which it operates through opportunistic acquisitions and the cross-selling of its end-to-end payment processing services, she said.
Electronic payment firms with customer portfolios and financials that improve Wirecard’s top and bottom lines are attractive, Steidl said. It may also look at businesses with financial technologies that enhance its e-commerce ecosystem for merchants, airlines, telecoms and service providers, she said.
The company reported EUR 1.2bn in cash and equivalents as of 30 September.
In the past, Wirecard has said it prefers deals under EUR 200m, according to this news service’s database. Last year, it bought Romania-based Provus for EUR 32m and Brazil-based MoIp Pagamentos for EUR 37m. Terms of its acquisition of Citi Prepaid Card Services, which was announced in June 2016, were not disclosed.
At a Goldman Sachs Technology and Internet Conference in San Francisco last month, Steidl told investors Wirecard liked the Citi deal because it delivered customers with longstanding relationships and an experienced management team that can sell its e-commerce and payment processing products.
There is ample opportunity to target parts of the US market that Citi previously had not, she added.
Because Citi initially obtained its prepaid card assets from its acquisition of Ecount in 2007, the business unit came with an operational infrastructure that was easy to separate from Citi, Steidl said.
Entering international markets through acquisitions has been a successful strategy for Wirecard so far, said Steidl, explaining that once it enters a new region it identifies the customers it wishes to target and customizes its offerings. Brazil, for instance, is comprised of many small merchants so Wirecard takes a different approach there than in South Africa, where she said the needs of clients look much different.
Other times Wirecard has forged strategic partnerships to extend its geographic reach, such as the alliance it formed with Sydney-based Cuscal to bring Wirecard’s merchant acquiring services and payment processing platform to Australian and global merchants with an Australian footprint.
The company has generated organic revenue growth of more than 20% in recent quarters.
Steidl acknowledged Wirecard has previously attracted takeover interest but she declined to elaborate.
Wirecard’s shares closed at EUR 45.37 on Tuesday, giving it a market capitalization of EUR 5.61bn.