EQS-News: Payments Group Holding - Terms and Timeline of the Transformation into a Growing, Profitable PayTech Company

+++ Press release +++

Payments Group Holding: Terms and Timeline of the Transformation
into a Growing, Profitable PayTech Company
 

• Renegotiation of the consideration for the agreed acquisition of majority shareholdings in four internet payment service providers
• Increased transaction certainty by extending the deadlines for the fulfillment of conditions precedent

Frankfurt/Main, 31 January 2025 – The Payments Group Holding (PGH), a Frankfurt-based investment company founded in 2012 and renamed in August 2024, now plans to close its transformative acquisition agreed in August 2024 in the second quarter of 2025, whilst a further delay cannot be ruled out as we cannot influence the timing of the occurrence of certain conditions precedent.

For the implementation of the transaction, PGH is acquiring 72.9% of Funanga AG and 75% each of Campamocha Holding Ltd. and Surfer Rosa Ltd. in a first step, and pays 9.15 million EUR in cash and the remaining purchase price by transferring a yet to be determined number of own PGH shares, under exclusion of the subscription rights of existing PGH shareholders. PGH already owns 2.1% of Funanga AG.

Instead of a fixed consideration of 68.1 million EUR for the stakes in the target companies, referred to collectively as The Payments Group (TPG), a variable consideration is to be rendered, depending on the valuation by the purchasers of PGH treasury shares (PGH investors) to be acquired by PGH to fund the cash tranche of the transaction.

PGH itself will now be valued based on its net asset value including assets outside the balance sheet at closing, estimated at 20 million EUR, of which 80% will be applied.

Under the original share purchase agreement of 13 August 2024, the comparative value of TPG versus PGH stood at 4:1 and may now end up higher or lower. The management of PGH expects the value ratio to improve in favor of its shareholders.

If, for example, the PGH investors were to value the group including the 75% stakes in the target companies pre-money at 96 million EUR and if the net asset value of PGH on the closing date was 20 million EUR (2.09 EUR per PGH share), this would result in a value ratio of 5 : 1. If, on the other hand, the PGH investors were to value the group at 64 million EUR, for example, this would result in a value ratio of 3 : 1. The second example would result in 18.4 million PGH treasury shares to be transferred (so far: 24.8 million). This mechanism for determining the purchase price is intended to ensure that PGH pays exactly the value objectified by 3^rd parties for TPG and that the interests of the buyers and sellers are largely aligned. In this way, it can be avoided that PGH pays too high a price for TPG and that the shareholders of TPG receive too low a price.

The acquisition is subject to various conditions, in particular the approval of the Malta Financial Services Authority (MFSA). The corresponding, comprehensive applications were submitted in September 2024 and processed in January by the MFSA, without significant objections or road blocks raised. Discussions with investors regarding the acquisition of treasury shares to finance the cash tranche of the acquisition in the amount of 9.15 million EUR in fall 2024 were very promising. They can only be proceed as soon as the approval of the MFSA has been obtained and - due to the turn of the year - the annual financial statements of the target companies for 2024 are also available. In order to minimize the risk of the transaction failing to meet the deadlines set out in the purchase agreement in August, both parties have agreed to adjust them. The deadline for the placement of treasury shares shall be extended from two to three months, starting after the approval of the MFSA and the 2024 annual financial statements have been obtained. In addition, the long stop date shall be postponed to 30 September 2025.

TPG brands operate in a combined 190 countries, are used for payments on tens of thousands of apps and websites and are available at 550,000 physical retail locations worldwide. TPG offers a comprehensive range of online payment services, including embedded financial services, prepaid technologies and global payment and payout solutions. TPG enables any online merchant and service provider to accept seamless digital, cash payments across borders and in multiple currencies. It provides a truly embedded and seamless 360-degree payment service. This ensures that end users never have to leave their chosen website, service or app to make a payment – eliminating the biggest point of friction in the payment process. There are overlaps between the four target companies in terms of management personnel and shareholders.

The acquired companies are profitable, cash flow-positive and growing strongly. TPG's hypothetical consolidated revenue for 2024, which has been calculated YTD SEP24 and projected to the full year, should amount to around 7 million EUR. The e-money license recently granted to Calida Financial Ltd. triggers additional growth. It entitles TPG to offer innovative e-money services and products throughout Europe. The license is now to be activated in all EU member states as part of the planned passporting process.

The founder and CEO of Funanga, Seth Iorio, will join the management of the holding company as Chief Strategy Officer alongside Christoph Gerlinger. He has been a digital entrepreneur for over 20 years. Already in 2011, he was Christoph Gerlinger’s fellow board member at the listed Frogster Interactive Pictures AG in Berlin. Together, the two created considerable shareholder value for their shareholders before the company was fully acquired by Gameforge AG following a public takeover bid. Frogster outperformed the Entry Standard Performance Index by more than 500% at the time. With the closing of the transaction, Seth Iorio’s investment vehicle acquires 50% of the shares of the general partner of PGH, which has changed its name to The Payments Group Management GmbH.

Jens Bader, PayTech expert and entrepreneur with over 20 years of industry experience in the payment sector, acts as CEO of Calida Financial. A few years ago, leading TPG employees around him built up a very successful international Internet payment services company with a transaction volume of over 1 billion USD.

Multi-year lock-ups were agreed for the 24.8 million PGH shares to be transferred to the TPG shareholders including Seth Iorio, Jens Bader and their vehicles as well as for the PGH shares of Christoph Gerlinger and his vehicle.

The Payments Group Holding is trading under the ticker symbol “PGH”. 

About The Payments Group Holding

The Payments Group Holding (PGH) is a listed holding based in Germany with majority shareholdings in four operating FinTech companies and a venture capital provider based in Frankfurt/Main.

Funanga AG, Campamocha Ltd with its 100%-owned subsidiaries TBWS Ltd and Calida Financial Ltd as well as Surfer Rosa Ltd form a fast-growing, vertically integrated e-Money PayTech group of companies - The Payments Group (TPG). TPG provides proprietary closed and open (branded and white-labelled) prepaid payment services to hundreds of online merchants worldwide. The synergy between these companies positions TPG as the future market leader in embedded financial products and prepaid solutions. Calida Financial Ltd. is the regulated company within TPG, having received an e-money license from the Malta Financial Services Authority (MFSA) in August 2024. This license entitles Calida Financial Ltd. to offer innovative e-money services and products across Europe.

TPG employs over 50 people and operates globally. TPG's customers make use of more than 550,000 POS cash payment points and the global online prepaid card network to process cash and cashless online payments.

Furthermore, The Payments Group Holding holds from its history as a leading German venture capital provider under the German Startups Group brand a heritage VC-portfolio of minority stakes in partly promising German startups via its wholly owned subsidiary German Startups Group VC GmbH.

For more information about The Payments Group Holding, please visit www.tpgholding.com.

 

Investor Relations Contact
Rosenberg Strategic Communications
Dirk Schmitt
d.schmitt@rosenbergsc.com
+49 170 302 8833