PayPoint has agreed to make a further strategic investment in obconnect, increasing its interest to 59.3% of the company.

In July 2022, PayPoint made a minority investment in obconnect, an early-stage technology platform with the capabilities to provide complete market ecosystems across Open Banking, Finance, Data, Energy, Confirmation of Payee and Enhanced Fraud Data.

This investment and partnership with obconnect have enabled PayPoint to leverage this technology platform and range of capabilities, offering Open Banking services to both new and existing clients. At a time when the number of applications for Open Banking is growing rapidly, this technology has been an important addition for PayPoint and its clients. As a result, this partnership has delivered on our expectations and the Group has already made strong early progress, with over 25 clients contracted for Open Banking services, including American Express and Citizen’s Advice, along with a growing pipeline of opportunities across new and existing clients.

Given this progress, PayPoint today announces that it has agreed to make a further strategic investment in obconnect, increasing its interest to 59.3% of the Company. This investment will further leverage obconnect’s Open Banking technology platform and unlock greater opportunities within both the PayPoint business and obconnect’s new business streams working with a number of key financial institutions and payment organisations.

The investment comprises the £3.0 million original convertible loan note, which will now be converted into ordinary shares along with a new investment of £10.5 million in cash which, combined, will give PayPoint a 59.3% interest in obconnect.

The agreement also includes a put option for PayPoint to obtain the remaining 40.7% of obconnect for a total cash amount of up to of £20.0 million, with the consideration dependent on the future performance of the Company. The put option is exercisable over three annual installments commencing 31 March 2025 with up to 10% puttable by March 2025, up to 25% (in aggregate) by March 2025 and up to 40.7% by March 2027.

The investment is subject to regulatory approval, with completion expected in early October.

Nick Wiles, CEO of PayPoint said:

“‘We’re delighted to be taking majority ownership of obconnect and strengthening the partnership we have forged over the past two years. The obconnect team, led by Darran Morford, will continue to drive further growth opportunities in the Open Banking sector for the business and this investment further underpins our confidence in achieving our target of £100m EBITDA by the end of FY26.”

Darran Morford, CEO of obconnect said:

“PayPoint have been the perfect partners for us over the past two years and we’re pleased to be cementing that partnership to fuel further growth in the next few years. Our mission to deliver industry-leading technology solutions in Open Banking and Confirmation of Payee (CoP) across the world, and we’re delighted to be working more closely with PayPoint to unlock further opportunities in this fast-growing sector.”