M&A activity in payments technology is dominated by payments processing, including such companies as Evertec and Qiwi. These companies represent nearly 65% of M&A activity and 75% of IPO activity.
The payment technology space has seen a great deal of investor interest, with deal activity growing at 25% YoY. That deal growth has been paralleled by strong acquirer interest. In the past year, 40 payments companies exited via M&A or IPO, representing an 11% jump in YoY exit growth over the 36 exit transactions in the prior year.
Over the past two years, 64% of exits in the payments space have taken place within the payments processing sub-category. These are companies which are involved in accepting credit or debit card information and relaying the information to a merchant bank or third party processor in order to get confirmation of transaction. As shown below, 42% of payments processing firms provide both point-of-sales and eCommerce solutions, while nearly 58% specialize in just one of those areas.
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Payments processing has seen significant activity on the M&A side with huge deals including Verofone System’s acquisition of Point, a major European payment processor for $870 million in 2011 and Cielo’s acquisition of Merchant e- Solutions for $670 million in 2012
In addition, payments processing companies took three of the four IPOs in the payments space over the last two years. These include:
- Universal Business Payment Solutions Acquisition (NASDAQ: UBPS), an eCommerce payment processor, IPO’d in 2011.
- Evertech (NYSE: EVTC), a payment processor in Latin America, went public in April 2013
- Qiwi (NYSE: QIWI), a payment processor in Russia, also went public in April 2013