Increasing number of PE investors are acquiring companies in the payments space

Driven by the accelerated growth and optimistic future outlook of non-cash payment industry, increasing number of PE investors are acquiring companies in this space.

In the first two month of 2014, 14 transactions with total disclosed value of $181m took place. 13 were domestic transactions and one was cross border transaction with 12 in US and one each in France, and Malaysia.

Key highlights include deals by PE / VC firms (like HandsOn3 LLC, Union First, and Ardian) of companies in transaction processing, and payment gateways category (including Banctec, MOL AccessPortal, and The Payments Company)

Note: Domestic transactions – Target and bidder companies are from same country; Cross border – Target and bidder companies are from different countries

PE and VC deals in payment industry in January-February 2014

Date Target Target description Target Category Bidder 26/02/2014 Kahuna Mobile marketing automation company that helps marketers test and automate their push notifications Mobile marketing Sequoia capital 25/02/2014 Cybersense Provides cloud-based and on-premises cybersecurity solutions Fraud prevention BRM Group; Opus Capital 24/02/2014 Deliv Provides crowdsourced same-day delivery service for large national multichannel retailers Others Simon Property Group, General Growth Properties, Macerich, and Westfield, Upfront Ventures, RPM Ventures 21/02/2014 BancTec Inc. Provides financial transaction automation and document management services Transaction processing HandsOn3 LLC 20/02/2014 Mogl loyality services An app that provides a loyalty program for restaurants Mobile app Sigma Partners 20/02/2014 Micropross Provides manufacturing products used to analyse and test smart cards Others Ardian 19/02/2014 MOL AccessPortalSdn. Bhd. Provides internet media and ecommerce services Payment gateways Sultan Ibrahim Ismail (Private Investor) 31/01/2014 Yoyo Card Offers gift card Gift card Undisclosed 30/01/2014 Quippi Operates a service--aimed at the Mexican market--which allows people in the U.S. or Mexico to buy gift cards, and share those gift cards via a PIN number Gift card Avalon Ventures 22/01/2014 SmartReceipt Inc. Provides software products that transform traditional retail transaction receipts into engaging 'smart' receipts that feature coupons and special offers for consumers Marketing solutions Mobivity Holdings Corp. 6/1/14 The Payments Company Facilitates electronic payments between businesses and their vendors and employees Transaction processing Union First Market Bankshares Corporation 6/1/14 Remitly Inc Provides mobile payments service that enables consumers to conveniently make person-to-person international money transfers from the US Mobile payments QED Investors

Note - Date is announcement date of the transaction; Source - Company press releases, FA team analysis

Acquisition rationale

Sequoia capital invested in Kahuna: This investment will help Kahuna continue developing its best-of-breed mobile marketing solution, scale operations, and expand its customer base. Deal value (U$ Mn) = 11

BRM Group and Opus Capital acquired Cybersense: CyberSense will use the investment to continue to develop advanced cybersecurity solutions that are helping some of the world's most-often-targeted organizations reduce the risk of costly and disruptive compromises, data breaches and compliance violations. Deal value (U$ Mn) = 5

Simon Property Group, General Growth Properties, Macerich, and Westfield along with existing investors Upfront Ventures, RPM Ventures and others invested another $4.5 m in Deliv which is a startup which hopes to provide same-day delivery with the help of a peer-to-peer network of shoppers and delivery people. The strategic investment further solidifies partnerships with the four operators that launched the same-day delivery service in malls in California and Illinois. Deal value (U$ Mn) = 4.5

HandsOn3 LLC acquired BancTec Inc.: With this acquisition HandsOn will combine BancTec with its existing portfolio Dataforce Group, which will enable HandsOn to leverage on the expertise and accomplishments derived through the combination

Groupon acquired Clublocal: The investment will be used to expand the company’s geographic footprint and its network of independent professional service providers and to accelerate the introduction of innovative features to its online and mobile booking and transaction platform. Deal value (U$ Mn) = 10.7

Sigma Partners acquired Mogl: The new investment will be used for hiring and bringing more features to the platform. Deal value (U$ Mn) = 5.9

Ardian acquired Micropross: This acquisition will enable Micropross to expand its business activities in the area of contactless smart card payment solutions. The transaction will also provide Micropross with global growth opportunities

Sultan Ibrahim Ismail (Private Investor) acquired MOL AccessPortalSdn. Bhd: Sultan Ibrahim Ismail, the Malaysia based private investor, has acquired a 15% stake in MOL AccessPortalSdn. Bhd. The acquisition will allow MOL AccessPortal to expand its business. Deal value (U$ Mn) = 120

Undisclosed bidder acquired Yoyo card Inc: This acquisition will help the card provider in expanding its operations. Deal value (U$ Mn) = 0.96

Avalon Ventures acquired Quippi: Quippi secured a financing of $2m from Avalon Ventures for international money transfers. Deal value (U$ Mn) = 2

Alibaba acquired 1stdibs closed series C funding from from Chinese e-commerce titan Alibaba. The strategic investment will help Alibaba better serve China’s fast-growing consumer market for high-dollar luxury goods. Deal value (U$ Mn) = 15

Mobivity acquired SmartReceipt Inc: Mobivity entered into letter of intent to acquire SmartReceipt. This acquisition would expand Mobivity's deployment to more than 17,000 locations including 6,000 from one of the largest quick serve restaurant (QSR) chains in the world

Union First Market Bankshares Corporation acquired The Payments Company: This investment will help The Payments Cpmpany to expand its capabilities in the large, but fragmented B2B payments marketplace

QED investors acquired Remitly Inc: Remitly completed its first close of Series A round of funding led by QED. Remitly will use the new capital to accelerate global growth. Deal value (U$ Mn) = 5.5