LSE-AIM listed e-banking and international payments firm Equals Group plc (formerly FairFX) has announced that it has acquired the assets from the international payments business of Effective FX Limited, a company that has been wholly owned by Amir Mehrad, the CEO of Effective FX, since its incorporation in 2012.
The international payments business of Effective FX consists of upwards of 200 corporate clients from a wide range of industries. For the twelve-month period to 31 August 2020, the EFX Book generated unaudited adjusted EBITDA of approximately £0.5 million and EFX had total assets of approximately £0.5 million, with net assets of approximately £0.03 million as at the same date.
As part of the acquisition, Amir Mehrad will join Equals to further develop its B2B sales process, utilising his experience and industry relationships. The company said that extensive due diligence has been performed on the customer base of Effective FX and its business, in common with previous acquisitions, and is expected to be integrated into the Group seamlessly.
The acquisition comprises the purchase of EFX’s client book and consideration for this acquisition is instalment based, against a targeted revenue of £2.6 million over three years. The first instalment of £125,000 is payable 14 days after completion. There are three more instalments of £125,000 at six months, nine months and twelve months after completion. Subsequently, there are eight further instalments, subject to revenue hurdles, bringing the total purchase price to £1,575,000 (USD $2.0 million). All consideration payable is to be satisfied from Equals’ existing cash resources.
The company said that the acquisition shows the continuing growth of the Group in B2B international payments via its three routes to market: firstly, directly to its own customers; secondly, via its Equals connect B2B2B strategy; and thirdly, via the acquisition of compatible businesses. Equals is increasingly being approached by other international payments businesses and will continue to selectively acquire if these companies meet the Group’s investment criteria and have accretive customer profiles.
Concurrently with this acquisition, the company noted that its Equals Connect business is growing strongly through the strength of its proposition and taking advantage of issues at competitors. Equals Connect has added 12 new white-label partners in 2020 to date, bringing the total to 25, with more in the pipeline. Turnover through the platform has increased 64% in the same period and is set to grow further as new clients increase activity. The Group sees this platform as a key aspect of its growth strategy for 2020 and beyond.
In addition to the acquisition of the Book and the success of the Equals Connect platform, the Group continues to focus on increasing its B2B customer acquisition. Strategically, the Group has built new products, connectivity and infrastructure in recent years and can now deploy more resources to selling those products to more customers. Accordingly, Equals has continued to advance its B2B growth strategy by a roll-out in December of a new CRM system which will yield improved client acquisition and increased revenues from existing customers. Concurrently, a new sales commission structure has been implemented to incentivise more new customer acquisition, the B2B focussed Equals Money website is now live and a B2B-dedicated digital/social marketing strategy to support this and drive traffic has also gone live. These steps form part of an overall wider growth strategy which will be outlined in the coming months.
Ian Strafford-Taylor, Chief Executive Officer of Equals, said:
“This acquisition highlights a number of key strengths of Equals in the B2B international payments arena. Firstly, we remain open to M&A opportunities and can structure deals to suit both parties whilst concurrently protecting our cash position. Secondly, it demonstrates the multiple ways we can acquire volumes and revenues, directly via sales and marketing, indirectly via our outstanding Equals Connect B2B2B model, and lastly via acquisition. Thirdly, the excellence of our payments infrastructure and technology means that Equals is a business that attracts talented operators such as Amir who clearly identify the significant benefits of having a much broader range of products to sell. I am delighted with this acquisition as well as having Amir as part of our team going forwards.”