Equals Group EQLS , a leading fintech payments group focused on the SME marketplace, has completed the purchase of the remaining minority interests in Equals Connect LTD.
Today’s awful capital markets are enough to turn even the most optimistic Bulls into fully fledged perma- Bears.
Nonetheless, one silver lining is that the sell-off has created an abundance of high quality opportunities for investors to upgrade their portfolio towards GARP stocks trading at attractive prices.
Indeed one company that fits the bill is Equals Money, which last month posted record H1 revenues up 86% LFL to £31.1m and in line FY’22 guidance (Est £10.7m adjusted EBITDA on £64m of sales).
Today the company announced the £3.43m acquisition (re equivalent to an Est FY22 run-rate of 0.5x EV/revs & 8x PBT) of the remaining 48% stake in Equals Connect (EC) that it did not already own from the 2 original founders.
CEO Ian Strafford-Taylor commenting: "The acquisition represents an immediately accretive utilisation of our surplus cash balances and is made possible by the strong performance of the Group this financial year which has continued during September."
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The deal is being funded entirely from EQLS’s mushrooming cash pile (re net funds closed June at £12.8m, or 7p/share), alongside underlining the Board’s confidence in the business' super charged, growth strategy.
Additionally, since EC is already profitable (H1’22 revs £7.2m, PBT£0.44m) & well understood, the transaction should involve very little (if any) integration costs, and similarly be both low risk & immediately earning accretive.
Better still, September trading has also been “strong”. Which says to me, the business is literally flying.
Meaning there’s an excellent chance too of further upgrades as the year progresses, assuming these positive trends continue.
Likewise, lifting my FY’23 forecasts (re £76.6m revenue & EBITDA of £14.8m) and valuation (152p/share).