Feb 24, Ant Financial (蚂蚁金服), the affiliate of Alibaba Group Holding (阿里巴巴), has agreed to buy UK payments company WorldFirst, reported by SCMP. The deal is valued at around USD 700 million, according to Techcrunch, a price that is in line with what has been reported by Sky News late last year.
Based in London, WorldFirst launched 16 years ago, and has transferred over USD 60 billion for 160,000 clients, according to Seeking Alpha. The company has around 600 employees and its GMV (Gross Merchandise Volume) was around USD 10 billion annually.
Adyen NV, a payment solutions company enabling merchants and businesses to process payments online worldwide, trades at 141 times predicted earnings. If we assume WorldFirst gets a similar premium with Adyen NV, the company shall generate just USD 5 million in net profit.
Bloomberg implied the company has failed to keep technological pace with newer firms. Apart from that, the margin of payments sector from west to China sellers for e-commerce has been squeezed because of competitors like PingPong, which serves over 250,000 China’s enterprises, Pingpong has become the No.1 in customer size in China.
But it has one strength particularly appealing to Ant: its provision of multicurrency accounts to merchants selling their wares through Amazon.com Inc.'s marketplace or Shopify Inc. By collecting revenue generated worldwide via one account immediately and without transfer fee, it would attract many vendors to use the company's product.
Ant's U.S plan thwarted last year. The company was forced to end the acquisition of Nasdaq-listed MoneyGram for USD 1.2 billion in 2017 by the U.S. government. Notably, WorldFirst closed its U.S business before, media thought it is an indicator of the acquisition.
Data collected by Capgemini shows that during 2015-2016, global non-cash transaction volumes grew at 10.1% to reach USD 482.6 billion, and in 2016, emerging markets collectively surpassed the North American Region for the first time in non-cash transaction volumes. The number of worldwide non-cash transactions is expected to be USD 876.4 billion in 2021.
To expand in Korea, Ant made an M&A deal valued at USD 200 million with Korean messing giants to its fintech division, Kakao Pay, in 2017. Alipay, Ant’s best-known product has access to merchants in 54 countries and regions, serving 1 billion users. Even with such staggering user base, the company still works on building its infrastructure to allow Chinese manufacturers to collect foreign sales more easily.