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Banco Santander is to pay £350 million for a 50.1% majority stake in Ebury, a provider of corporate banking services to SMEs that trade internationally.
Spanish bank Banco Santander SA on Monday announced it is acquiring a major stake in the British payments platform Ebury. The price of this acquisition is, according to the announcement, £350 million ($453 million).
Proud to announce that @bancosantander has bought a majority stake in Ebury! 🚀 https://t.co/3F8Zisjz1u pic.twitter.com/15GC4O05A8
— Ebury (@EburyUK) November 4, 2019
Santander is buying 50.1 percent of Ebury’s stake, which makes it a stakeholder having a controlling vote. This merger came as a part of the Spanish lender’s try to push its digital strategy rise through new projects.
Ebury has been active in 19 countries and operates with 140 currencies. The company has been producing a constant average annual revenue rise of 40 percent during the period of the last three years.
From £350 million meant for this deal, £70 million (approx. $90.4 million) will be put against new primary equity. The company is expecting more than a 25 percent return on invested assets in 2024.
The UK-based company will employ the funds in order to bear up with its intentions of entering new markets, with a focus on Latin America and Asia. The deal will also be good for Ebury to enter the Latin American market, as Santander holds more than 26 percent only in the Brazilian market.
As per the announcement, the current CEO of Banco Santander Brasil Sergio Rial, will join Ebury’s board of directors as its chairman.
Ana Botín, CEO of the Santander Group, commented:
“By partnering with Ebury, Santander will deliver faster and more efficient products and services for SMEs, previously only accessible to larger corporates.”
She added that larger lenders as are Citibank, HSBC or Standard Chartered are all mostly focused on serving bigger firms. However, “Ebury’s user-friendly system for bringing onboard new customers would make it easier for Santander to target small businesses,” said Botin.
By signing this deal, Ebury will finally be able to operate as an independent unit, supported by Santander. The new parent company obliged not to make any crucial changes in the current company’s management and the existing investors promised they will reinvest in the transaction.
Co-founders of Ebury Juan Lobato and Salvador García said in a common statement:
“It is an exciting time for Ebury, we have just completed our first acquisition, and the new capital from Santander and our existing shareholders will allow us to invest in new ways to serve SMEs trading internationally and continue the growth in our business while keeping our entrepreneurial culture.”
This kind of step is not unfamiliar to Santander because it previously made similar investments as it is the one in Brazilian payments processor Getnet. Santander acquired a majority stake in Getnet back in 2014 and last year it bought out its remaining shareholders. The bank said it expected its investment in Ebury to give a return on invested capital of more than 25 percent in 2024. Among early investors are also venture capital group 83 North and Germany-based private equity firm Vitruvian Partners.
On the other hand, last month, Ebury said that it had acquired a fintech company dubbed Frontierpay, that specializes in international payroll solutions. The deal is, however, still going through regulatory approvals.
Some analysts think that it is the competition from the likes of TransferWise that may have to urge Santander to invest in Ebury. TransferWise is generally one of the biggest players in currency transfer services that aims both on individuals and companies. There are also companies as Adyen that built and still operates its online payments business out of the Netherlands. Then there is Revolut, Monzo and a lot of other so-called ‘challenger banks’ that are reconsidering what it means to provide banking services to consumers and businesses, and also have valuations in the billions.