Equals Group (AIM:EQLS)
announced today that it has signed a new B2B agreement with HomeSend, a joint venture of Mastercard and a global leader in cross-border payments.
HomeSend is the first large-scale B2B partner to utilise the Group's 'Directly Connected Direct Settling' participation status with the Faster Payments service to make UK payments at scale.
Under the agreement, Equals will bolster HomeSend activities in the UK, enabling customers to send money to UK bank accounts ‘in real time and with upfront transparency of all associated fees.’
It said the agreement highlights Equals' B2B2B/C capabilities in facilitating other financial institutions' needs via its platform which it describes as ‘robust, scalable and efficient.’
By combining bank-grade UK clearance capabilities with the foreign exchange services (FX), as well as Equals’ expertise in the same platform, this will provide the company with ‘a clear competitive edge’ in the international payments space, Equals Group told investors.
The company said it has invested into building products and connectivity to payments networks over the past two years in order to support its B2B offering. Ian Strafford-Taylor, CEO of Equals, said the group was now seeing “tangible results of that investment.”
Strafford-Taylor said today’s agreement with HomeSend is the largest manifestation of this to date and will provide significant incremental scale through its payment systems.
He added, “We can now offer major corporates, banks and financial institutions, continual access to real-time payments via APIs and bespoke portals, all with the security of having money flowing through our settlement accounts with the Bank of England.
Coupled with our well-established credentials in the Foreign Exchange market, this new service provides a powerful and exciting new B2B revenue stream for the Group."
"HomeSend is committed to playing a key role in making cross-border payments simple, secure, and certain. We're delighted to partner with Equals given that establishing direct connections to real-time clearing systems as they become more prevalent is core to our strategy,” added Stephen Doyle, Chief Executive of HomeSend.
Shares in Equals Group have ticked up by nearly 10% in value over the past two weeks to open 7.33% higher this morning at 27p following the announcement.
3 Reasons to Follow Equals
EQUALS is an international payment services provider to the retail and corporate segments of the UK market, which combined is estimated to be worth £60bn a year.
Leading IP
The cloud-based peer-to-peer payments platform is widely regarded in the industry as ‘best-in-class’ enabling personal and business customers to make low-cost multi-currency payments across a range of FX products, all via one integrated system.
The FairFX platform facilitates payments either directly to Bank Accounts or at 30 million merchants and over 1 million ATM’s in a broad range of countries globally via Mobile apps, the Internet, SMS, wire transfer and Mastercard/VISA debit cards.
Growing Industry Recognition
In recent weeks, Equals said it is ‘increasingly being approached by other international payments businesses’ and highlighted that it will continue to selectively acquire companies.
Last month, Equals acquired certain assets from the international payments business of Effective FX (EFX) for a consideration of £1.6m, to be satisfied from existing cash resources.
The ‘earnings enhancing acquisition’ primarily comprises the purchase of EFX's client book of more than 200 corporate clients, from a wide range of industries, which generated adjusted EBITDA of approximately £0.5 million for the 12-month period to 31 August 2020.
Equals said the acquisition showed 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.’
CEO, Ian Strafford-Taylor, said the acquisition highlighted Equals’ key strengths in the B2B international payments arena; its openness to M&A opportunities, its versatility in acquiring volumes and revenues, and the strength of its payment’s infrastructure and technology.
Compelling Valuation Multiples
Concurrently with the acquisition, Equals said its Connect business is growing strongly through the strength of its proposition and taking advantage of issues at competitors.
In addition, the group continues to advance its growth strategy with a new CRM system in December to yield improved client acquisition and increased revenues from its customers.
Meanwhile, a new sales commission structure has been implemented to incentivise customer acquisitions while a B2B-focused website, Equals Money, is now live. Equals said these steps form part of its wider growth strategy which will be outlined ‘in the coming months.’
On current valuation multiples within the finTech, ERP and Payments Processing Industry, Equals is currently trading in the lower EV/Sales quartile, despite the growth in its addressable market and indicated accelerating revenue.
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