Infibeam to acquire Dubai-based payment gateway service provider

The cost to acquire Vavian Int'l is AED4.32mn and its approximate annual gross turnover is AED7.2mn implying a price/sales multiple of 0.6x.

May 21, 2018 12:05 IST India Infoline News Service

Infibeam Incorporation Ltd has announced that Infibeam Global EMEAFZ-LLC, its wholly-owned subsidiary based in Dubai, has acquired 100% shareholding of Vavian International Ltd. The acquisition is expected to be completed in the next two to four weeks. and upon completion of the aforesaid acquisition, Vavian International will become a direct subsidiary of Infibeam Global EMEA FZ-LLC and a step-down subsidiary of Infibeam Inc.

Vavian International is engaged in the online digital payments processing business (payment gateway services) offered to merchants in the Middle-East. Vavian processes approximately 2,500 transactions with a transaction value of AED2mn on a daily basis.

As per the announcement, the acquisition would expand Infibeam’s online digital payments business in the Middle-East. Vavian enjoys a very strong and long-term customer loyalty in the markets it operates in and uses the payment platform of CCAvenue. Infibeam has received the final order from the National Company Law Tribunal (NCLT), Ahmedabad bench, approving the amalgamation of Avenues (India) Pvt Ltd (CCAvenue) with lnfibeam Incorporation Limited.

The company added that PG integration with existing customers' promises for higher transaction processing volume in the future, prospects for new business with access to fast-growing Middle-Eastern markets, promises larger volume.

"By this acquisition, our company will have multi-fold opportunities of growing its online digital payments as well as other related businesses in Middle-East and further value addition opportunities in those markets. The acquisition is expected to be significantly valued accretive for the company," the company said in a statement to the exchanges.

The cost of the acquisition is AED4.32mn and the approximate annual gross turnover of Vavian is AED7.2mn implying a price/sales multiple of 0.6x. Although this multiple might seem cheap, the smaller transaction count per day of 2,500 might be a reason for the lower multiple. For example, Vantiv’s acquisition of Worldplay was at an approximate valuation of 7x sales. Worldplay then was said to execute over 40mn transactions worldwide in an average day.

We believe that this would be an excellent move by the company to capitalise on trend if higher growth in cashless transactions across the globe. Typical EBITDA margins of processing companies are 40%-50%; hence, this would be in-line with Infibeam’s Web Services current EBITDA margins of ~45%.

Infibeam Inc ended the day at Rs164, down Rs1.05, or 0.64%, from its previous close of Rs165.05 on the BSE.

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