Rapyd, the London based “fintech-as-a-service” start-up is paying $610m for the Global Payments Organisation (GPO) division of PayU. The seller is Prosus, an Amsterdam-listed investment group controlled by Naspers, the South African conglomerate.
PayU GPO is an emerging market eCommerce gateway, orchestrator and payment facilitator that operates in 30 countries. The acquisition will enhance Rapyd’s capabilities in Latin America and central Europe, notably Poland. The combined group will service over 250,000 clients globally in 41 jurisdictions with a workforce of 1,700 across 22 countries.
The sale certainly looks like an excellent deal for Prosus. It gains a welcome cash injection and will retain PayU’s largest and fastest growing markets – Turkey, and India. The GPO businesses which Rapyd is acquiring are growing slowly and are barely profitable. As a trade buyer, Rapyd should be able to find plenty of synergies. However, as PayU is itself built from numerous acquisitions, the integration and decommissioning of its multiple technical platforms may be challenging.
Rapyd, which has already raised $770m according to Crunchbase, is asking investors for a further $700m to fund the PayU GPO deal. Arek Shtilman, CEO, says this will be the largest fintech raise so far in 2023 and that he wants to take advantage of the downturn in technology finance to make more acquisitions.
The price represents 1.6x revenue or 68x underlying trading profit based on the PayU GPO FY 23 figures published with the Prosus annual results.
These showed that Pay U GPO annual payment volumes rose 13% to $39 billion. This is a modest performance for a payment business targeting digital merchants and much lower than the increases of 22% and 54% in previous years.
Revenue was up 15% at $393 million but PayU GPO posted a trading loss of $14 million including a $23 million provision “related to merchants in Brazil and in the travel industry.” Underlying trading profit was $9m.
[…] Rapyd, the London based global “fintech as a service” provider, has paid $610m for the slowest growing and least profitable parts of the sprawling PayU empire. The purchase price will be financed by a fresh capital injection into Rapyd in what the company claims could be the largest Fintech fundraise of 2023. Arik Shtilman, CEO, took to LinkedIn to explain the rationale. “If you don’t aim for a big outcome, you won’t get an outsized return,” he says. More details on the Business of Payments blog. […]