Perth-based fintech company Peppermint Innovation will deliver a cashflow positive milestone for its international remittance business on the back of a planned acquisition of Melbourne-headquartered RemitWisely.
Under the a deal, which was announced to the ASX on Friday, 16 March 2018, Peppermint has signed an exclusive option to acquire 100 per cent of AusRemit Pty Ltd, which trades as RemitWisely.
Formed in 2017, RemitWisely provides money transfer/remittance services from Australia to more than 200 countries around the world in more than 50+ currencies – all on one platform. It processed AUD$5.5 million in remittances in its first year of operation.
Investors welcomed news of the acquisition, with Peppermint’s shares trading up 22 per cent to 2.2 cents on the day the announcement was made, with 2.27 million shares changing hands.
Peppermint Innovation’s Managing Director and CEO, Chris Kain, said the acquisition of AusRemit provided an excellent launch pad for the company’s international remittance business.
“RemitWisely has been well constructed and has an excellent digital footprint but it has been constrained because it didn’t have access to the resources required to grow,” Mr Kain said.
The injection of Peppermint’s resources will change that and from the point of acquisition, this business will have the ability to grow rapidly.
“This is exciting given the expanding size of the global remittance market and we hope to double the value of remittances across RemitWisely’s platform over the next 12 months.
“For example, in 2016, people living abroad sent an estimated US$574 billion back to their home countries*, while during the same year, US$16.184 billion in remittances was sent from Australia to other countries around the world.
“These figures are predicted to increase substantially in the next couple of years with the World Bank forecasting global remittances will top US$616 billion in 2018^ and increase to approximately US$640 billion in 2019.”
The final acquisition price will comprise 50/50 cash to equity, to be calculated on a multiple of three times AusRemit’s earnings before interest tax depreciation and amortisation (EBITDA), or an agreed minimum of AUD$560,000, based on costs to build RemitWisely – whichever is greater.
The target date for acquisition, subject to Peppermint being satisfied with its due diligence enquiries, is 1 May 2018 unless both parties agree otherwise.
Mr Kain said the planned acquisition of RemitWisely was consistent with Peppermint’s core objective to leverage and expand on its established business operations in the Philippines.
“We will continue to assess other potential opportunities to further build on our international remittance business from Australia, as we strive to deliver on our stated objective to generate and build multiple revenue streams for Peppermint,” he said.
“We believe these important initiatives will deliver real value to our shareholders.”