LONDON: Equals Group PLC, the e-banking and international payments group, has acquired the entire issued ordinary share capital of Casco Financial Services Limited, a UK based payment services provider for £1.725 million with a potential additional consideration of £2.0 million, depending on future performance.

Casco, which is regulated by the FCA as an Authorised Payment Institution (API), was established in 2010 and has historically focused on the provision of international payments, primarily for corporate clients.

Casco launched an additional product in 2017 – the provision of infrastructure services to the international payments sector. Through this Infrastructure Services platform, Casco offers a white-label product enabling other FX and payments companies to scale their businesses by utilising its technology, banking, liquidity and compliance capabilities.

For the last 12 calendar months to 31 October 2019, Casco generated unaudited revenue of £3.3 million, EBITDA of £0.3 million and profit before tax of £0.2 million. Post-acquisition, Equals expects to extract cost synergies of £0.4 million per annum. As at 31 October 2019, Casco had net assets of approximately £0.3 million.

The Acquisition is in accordance with three of the Group’s stated strategies: to consolidate smaller, attractive market participants, expand its product range and leverage its investment into deeper payments connectivity.

As part of the payments connectivity strategy, since 2017 Equals has been focusing on supply-chain rationalisation. This has meant building out its platform to integrate deeper into payment networks and provide “connectivity” which, in turn, vastly improves customer experience (CX) and retention as well as yielding improved economics for the Group. The most recent example of this is Equals’ direct connection to Faster Payments and Bank of England settlement accounts.

Equals Connect will combine this investment in deep connectivity with the Casco platform to accelerate the Group into the B2B service provider industry.

The Board believes there is a substantial addressable market within this subsector of payment services and sees significant opportunities for well-positioned companies to capture market share.

The Board also notes that Banco Santander recently paid £350 million for a 50.1% stake in direct competitor Ebury Partners UK Limited, illustrating the growing value of this subsector.

The initial acquisition price of £1.725 million is being satisfied using a combination of cash and shares.

Concurrently with the Acquisition, Craig Granger, Kane Granger and Jack Bryant, the current senior management team of Casco, have joined the Equals Group as employees. These individuals will retain an aggregate 48.19% economic interest in the Subsidiary entitling them to 48.19% of any dividends paid by the Subsidiary to the Group and/or 48.19% of any sale proceeds of the Subsidiary should it be sold. Various protections have been put in place in respect of that economic interest.

Ian Strafford-Taylor, Chief Executive Officer, commented: “We have been planning to enter the Service Provision sector for some time in order to leverage the Group’s resources in a parallel market, where all of the same attributes are required as our core international payments division. This transaction enables us to enter with a proven provider and penetrate this growing market at pace. In addition, we are also acquiring an excellent international payments team and over 1,000 clients, most of which corporate clients, who will benefit from our existing proprietary technology and excellent operations teams. I very much look forward to working with Craig, Kane, Jack and the rest of the incoming team on further expanding our services.”

Craig Granger, Managing Director, Equals Connect, commented: “After building Casco for nearly 10 years I am delighted that our team and clients are now joining the Equals Group. With a shared culture and attitude, and with Equals’ significant resources behind us, I am confident that our Service Provider offering will flourish at an even faster rate.”