"For all that I'm happy about the deal, and I recommended it to the board of directors and the shareholders, this has been my baby since 2007; but it's the right move for the company," SafeCharge founder and CEO David Avgi told "Globes" today. It was reported yesterday that SafeCharge would be sold to Canadian company Nuvei for $889 million (£699 million).
SafeCharge's controlling shareholder, and its co-founder with Avgi, is Teddy Sagi, who will receive close to $600 million for his holding in the company. SafeCharge is listed on the London Stock Exchange with a market cap £651 million, after its share price shot up 22% yesterday following the news of the offer to purchase.
"SafeCharge is a payments technology company. We provide payments solutions for several sales channels. We started with online, developed to cover mobile, and now points of sale as well," says Avgi. "The company's roots are from 1999, but in 2007 it started to go international, when we teamed up with clearers in Europe like Royal Bank of Scotland, Barclays, American Express, and PayPal."
Avgi explains that the company's technology "sits between businesses and the financial institutions, and enables businesses to have access to the whole world of banking and payments, and to operate as global traders, and not just locally." He mentions as an example a Chinese tourist who goes to London and wants to buy at World Duty Free (one of the company's customers), but who has no Visa or Mastercard credit card, and wants to pay with WeChat, the most popular chat and payments application in China, which serves him as a digital wallet.
SafeCharge connects all the sides to the transaction. "Our competitive advantage is that we make it possible to be both connectors and clearers by means of the same simple interface," says Avgi. The company works B2B and not just vis-a-vis the end consumer. Its customer list includes online food order and delivery service Just Eat, taxi-hailing app company Gett, and customers in online gaming and betting like Ladbrokes and William Hill, the sector in which it began. Avgi says that in time the company developed into additional verticals, which today account for over 50% of its revenue. "We gained momentum in industries that are growing faster: tourism, retailing, marketplaces," he says.
Of the acquiring company, Nuvei, Avgi says that it is a Canadian company backed by its Canadian founder and CEO Philip Fayer and two strong financial entities: CDPQ (Caisse de dépôt et placement du Québec) and Novacap, two Canadian funds, which invested in Nuvei in 2017. According to their websites, CDPQ manages $301 billion of assets and Novacap $2.8 billion.
"We have known Nuvei from the industry for several years" says Avgi, "It's a case of two complementary companies, not competitors. On a geographical level, they focus on North America, while we primarily focus on Europe and Asia, and recently entered the Mexican market as well. On the sector level, we have fairly large online customers, while they focus on SMB. We don’t share the same customers or the same markets, and our products are also a little different: theirs are more for points of sale, with terminals in stores."
Part of the rationale behind the deal, he says, is the fact that there is a clear trend of consolidation in the fintech industry. "There have been very many deals in the industry. It’s a competitive and regulation-oriented industry, and one player swallows up another. Our board recognized that what was right for the company was to join the consolidation trend, so that we could become a bigger player. We'll enter new geographies, reduce the concentration of our customer base, and we'll have more capabilities," says Avgi.
The offer to purchase is £4.65 ($5.5) per SafeCharge share, which compares with a 2014 IPO price of £1.62, and a peak reached last year of £3.55. A few months ago, Avgi himself exercised options he held at a respectable profit of several million pounds, and sold some of the shares he received to controlling shareholder Teddy Sagi for £13 million. That sale was at £3.26 per share, but Avgi does not appear perturbed by the thought that he could have gained more had he not sold the shares. Today, he holds a 2.2% stake in the company, worth $19 million under the terms of Nuvei's offer.
SafeCharge has about 400 employees, 150 of them in Israel (some 120 at the development center and 30 at a subsidiary), with the rest spread between China, Singapore, Cyprus, Bulgaria, the UK, Italy and Mexico.
Avgi finds it important to stress that the development workers have no cause for concern. "In deals like this the workers are sometimes a little anxious. I wish to make it very clear: one of the reasons for the deal is the technology, and so the development workers in Israel and Bulgaria should be confident that we shall continue to grow and develop new products."
Will you stay with the company after the deal is completed?
"There are a few more approvals to obtain before completion of the deal. Until then, I'm a SafeCharge employee, and once the deal is completed I'll see, but I'm very positive about my continued activity in the company."
Published by Globes, Israel business news - en.globes.co.il - on May 23, 2019
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