Fintech firm Zepz plans M&A, new digital wallet after layoffs

LONDON — Zepz, the proprietor of cash switch corporations WorldRemit and Sendwave, is on the hunt for mergers and acquisitions after reducing 26% of its workforce final month, the corporate’s CEO instructed CNBC.

With a $5 billion valuation, Zepz is likely one of the largest fintech firms in Europe, backed by main buyers together with Accel, TCV and Leapfrog.

The corporate allows customers to ship cash from a smartphone or laptop to individuals overseas, who can obtain it of their checking account, cell pockets, or as a cell airtime top-up.

The service is a challenger to giant banks and established cash switch providers like Western Union, touting cheaper charges and the power to maneuver funds quickly. A detailed rival is Smart, which additionally claims to supply cheaper worldwide cash transfers than banks.

Mark Lenhard, Zepz’s CEO, mentioned the agency wished to develop its portfolio of companies in an effort to personal a bigger a part of the worldwide digital funds pie.

Lenhard did not determine which firms Zepz was seeking to purchase, however mentioned the sharp stoop in non-public fintech valuations made it a beautiful time to kick off M&A exploration.

The general worth of cross-border funds is forecast to extend from $150 trillion in 2017 to over $250 trillion by 2027, based on the Financial institution of England. It is a extremely aggressive business with numerous gamers working and taking a slice of every transaction a shopper makes.

A specific focus for Zepz product-wise within the close to time period is digital wallets, Lenhard mentioned, with the corporate planning to launch its first digital pockets “imminently.”

“We need to be a core monetary hub for a really explicit phase,” he instructed CNBC Wednesday, with a selected concentrate on migrant communities sending funds dwelling.

The push into M&A is a shock transfer in some ways because it follows a big quantity of value discount on the 13-year-old firm. In Might, Zepz laid off 420 staff, equating to about 26% of its international workforce.

Zepz says it lower the roles to consolidate its operations after its acqusition of U.S. remittances agency Sendwave led to a duplication of sure roles.

Nonetheless, on the time, Zepz mentioned it wasn’t pausing hiring, and was actively making an attempt to fill 200 roles.

It marked the second time in just below a yr Zepz laid off workers. In June 2022, Zepz lower round 5% of its workforce, based on Sky Information.

“Any time you are shedding people it is laborious, it sucks, however it was definitely the appropriate factor to do. We have expanded issues out of that,” Lenhard mentioned Wednesday.

He added that he hopes the corporate’s upcoming digital pockets product will persuade clients to rely extra on Zepz, moderately than utilizing competing digital banks and different monetary apps which have grown their providers to supply a a lot wider vary of merchandise.

PayPal, for instance, affords customers cell wallets, the shopping for and promoting of cryptocurrencies, and purchase now, pay later installment loans, amongst different issues.

Like different fintechs, Zepz has been in cost-cutting mode because the business faces big strain from a stoop in know-how valuations, stoked by a number of macroeconomic headwinds together with increased inflation and rates of interest.

Regardless of this, Zepz says it has been much less vulnerable to these financial pressures than different corporations within the house. World remittances is much less impacted by broader macroeconomic pressures than, say, banking, based on Lenhard.

Zepz’s total buyer transactions are up 25% year-to-date as of April 2023, the corporate mentioned, whereas its buyer progress accelerated to 30% on common and by as a lot as 80% in sure areas.

The corporate, which hit month-to-month profitability within the first half of 2022, needs to attain profitability on a full-year foundation this yr.

WATCH: ‘Sea of sameness’: Are smartphone makers out of concepts?