Momentum in digital payments M&A continues as FairFX grabs CardOne for £15m and raises an extra £26m

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foreign bank machine (Source: Getty)

Activity in the digital payments sector is staying heated, as online travel money provider FairFX has stumped up £15m for current account business CardOne.

The acquisition is a new step forward in FairFX's aim to become a digital banking services company. At the moment the business, which sponsors Sky Sports' coverage of Formula One, focuses on providing travel cash and currency transfer services through its cloud-based peer-to-peer platform.

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FairFX is also raising a further £26m to help boost its ambitious plans, £25m of which will come from a new share placing and £1m from an issue of new shares to existing shareholders. The majority of this will go towards funding the CardOne deal.

“The acquisition of CardOne is a major step forward for FairFX as the group looks to broaden its offering and build a digital banking services company,” said FairFX chief executive Ian Strafford-Taylor.

“To date, FairFX has been successful in disrupting the currency payments market by offering its customers a better service and value. CardOne has done much the same in the banking space.”

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FairFX allows customers to order a prepaid Mastercard loaded with foreign currency, have cash delivered to their door or have money paid to a foreign exchange bank account.

“Mainly from expected cost efficiencies and the fact that CardOne Banking is already a growing, profitable business, we forecast 18 per cent earnings per share accretion in 2018 and 12 per cent in 2019 from this transaction,” said analyst Sandy Chen at broker Cenkos.

“With a strong management team, efficient and secure operating platform, and highly competitive customer propositions that compare well versus PayPal, for example, we expect phenomenal (well over 40 per cent per annum) growth in revenues and earnings over the next several years.”

Digital payments businesses have become increasingly popular as acquisition targets over the last few years, especially among private equity firms who are looking to back the next big name.

Private equity houses Blackstone and CVC look set to acquire Paysafe for £2.96bn, while startup Stripe is targeting tie-ups in China and FTSE 100 firm Worldpay is in the midst of a £7.7bn bid for the US's Vantiv.

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Tags: FinTech