Payments group Finablr will proceed with a £306m initial public offering in London, a lower deal size than initially anticipated, after a jolt of market volatility and a grim performance by Uber after its debut on Wall Street.
The IPO — set to be London’s second biggest this year — will see the owner of Travelex and UAE Exchange float 175m shares at a price of 175p each, below the 210p to 260p range previously indicated, according to terms seen by the Financial Times.
One banker close to the deal said the knockdown price was a reflection of “market conditions and investor feedback”. Finablr declined to comment.
The fall in the offer price comes in the wake of a disappointing market debut for ride-hailing app Uber, which floated last week. Its stock fell almost 11 per cent on Monday, its second day of trading, to close at $37.10, leaving it 18 per cent below its IPO price of $45 a share. On Tuesday it rebounded a little.
Markets have also been upset by the escalation of a trade war between the US and China, as the world’s two biggest economies have ratcheted up hostilities with reciprocal tariffs in recent days. The S&P 500 has dropped by about 4 per cent over the past week.
Finablr — which is based in the United Arab Emirates and operates in cross-border payments, foreign exchange and payments technology — will sell 175m shares for a deal size of about £306m, according to the terms. Underwriters can choose to sell another 10 per cent via a so-called “greenshoe” mechanism to bring in further proceeds of £31m.
About 25 per cent of the company is expected to be freely traded, not including the greenshoe clause, for an implied market capitalisation of about £1.2bn. Finablr will use the proceeds to cut debt as well as fund its expansionary ambitions.
Despite the lower-than-anticipated price point, Finablr’s listing comes as a sign of life for European flotations, which have been relatively quiet so far this year. The value of the continent’s IPOs totalled €700m in the first three months of 2019 compared with €13.1bn in the same period last year, according to data from PwC.
Finablr’s flotation is set to be London’s second biggest so far this year, after Network International, a fellow UAE-based payments group, raised $1.6bn last month. That listing marked the UK’s biggest tech IPO since Worldpay in 2015.
Promoth Manghat, Finablr’s chief executive, told the Financial Times last month that the group was a “global, scale player”. “The interest we have had is very encouraging given the structural opportunity, as global payments continue to grow,” he said.
Payments groups have reaped the rewards of a structural shift away from cash in recent years. Their rapid growth has recently triggered a flurry of merger and acquisition activity.
The $43bn purchase of Worldpay by US-based Fidelity National Information Services last month means this year is already the biggest on record for payments M&A by value. Analysts have said the move towards consolidation is set to continue as pressure is heaped on companies to avoid being either left behind or displaced by new entrants.
Finablr has 23m retail customers across 170 countries, and processed about $115bn in more than 150m transactions in 2018. It is majority-owned by Indian entrepreneur BR Shetty, who set up UAE Exchange almost four decades ago.
Last month the company appointed a board which includes Michael Tomalin, a former Barclays banker and chief executive of the National Bank of Abu Dhabi, as co-chairman, alongside Mr Shetty.
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