Equals Group buys remaining interest in Equals Connect
By Josh White
Date: Monday 03 Oct 2022
(Sharecast News) - Fintech payments company Equals Group has completed the purchase of the remaining minority interests in Equals Connect for a potential total consideration of up to £3.43m, it announced on Monday.
The AIM-traded firm has announced the acquisition of Casco Financial Services on 19 November 2019, with the sellers retaining a 48% economic interest in Casco's infrastructure services business, the white-label business that was then renamed Equals Connect.
Equals Connect now uses the infrastructure of the group to offer a white-label international payments platform to smaller foreign exchange brokers.
Since the acquisition of the initial interest, Equals Connect had been profitable, and undergone "rapid" growth.
In the year ended 31 December, it generated £7.7m of revenue and £0.4m in profit before tax, while in the six months ended 30 June, the unaudited figures were revenue of £7.2m and profit before tax of £0.44m.
As at the end of 2021, Equals Connect had net assets of £0.7m, and on 30 June it had net assets of £1.1m.
Total consideration for the minority stake in Equals Connect comprised an immediate cash payment of £0.93m, and an immediate cash payment of £0.475m to cover the share of distributable reserves attributable to the minority shareholders.
It would also include a cash payment of £0.93m by 30 September 2023, and a cash payment of £0.465m by 30 March 2024.
Finally, if certain targets were exceeded, then further payments not exceeding £0.63m could be payable conditional on certain milestones in the period up to 31 December 2023.
The full consideration was being funded through the group's existing cash resources.
Equals said the two founder-directors of Equals Connect, Craig Granger and Jack Bryant, would remain with the business after the acquisition.
"We are delighted with the way in which Equals Connect has progressed as part of the Equals Group since the initial acquisition of Casco in November 2019 under the leadership of its founder, Craig Granger, and fellow founder shareholders Kane Granger and Jack Bryant," said chief executive officer Ian Strafford-Taylor.
"The acquisition of the remaining shares shows our commitment to the business.
"With Granger taking on the role of chairman of Equals Connect and Bryant becoming managing director of Equals Connect as well as being operations director for Equals Group, we have a highly experienced team in place who will continue to oversee the exciting growth prospects of the Equals Connect business as we move forward."
Strafford-Taylor said that for the group, the acquisition represented an immediately accretive use of its surplus cash, and was made possible by the strong performance of the group in the current financial year, which had continued through September.
"Our strategy is to offer platforms and products to the B2B customer segment both directly and also via white-label relationships utilising our extensive platform capabilities and this transaction marks another important step on this journey."
At 1249 BST, shares in Equals Group were up 5.92% at 88.44p.
Reporting by Josh White at Sharecast.com.
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