While COVID-19 has threatened and disrupted a lot of markets around the world, there are areas, such as the fintech industry, that have, in fact, benefitted and opened new doors for growth and innovation.
Nexi’s acquisition of the state-controlled instant payments provider is expected to result in Europe’s largest payments companies.
- Nexi is to acquire SIA for €6 billion in stock, holding 70% stake in the new company
- The value of the merger is calculated at €15bn
- The new European payments champion will be included in Italy’s top 10 publicly traded companies
- What does the merger mean for the fintech industry?
- What does the future of payments have in store?
Behind the Scenes of the Merger
Milan-based Nexi is a recognizable payment processor in Italy, the biggest out there.
In 2019, the company generated €984.1 million. Despite failing to live up to the expectations of investors’ forecasts of growth during the pandemic, Nexi still saw a 34% increase in its stock this year. By investing in Sia, the company will increase its annual revenue from last year twice, reaching nearly €2bn.
Together, Nexi and SIA are to reach a market value of €15bn and are to be listed in Italy’s top 10 publicly traded businesses.
For an overview of the companies before the merger, Nexi’s equity market capitalization in 2019 was announced at €10.6bn, while SIA’s value was €4.2 billion
The Race To the First Place
The idea of Nexi’s acquisition of SIA didn’t appear overnight. The two businesses actively began negotiating following talks of Worldline’s acquisition of Ingenico in 2019 for €7.8bn. Merged, Wordline and Ingenico would form the strongest and largest payment provided across Europe.
Nexi and SIA are now to take over the first place as European payments champion with 2 million merchants, 120 million cards, and 21 billion acquiring transactions.
Paolo Bertoluzzo, the CEO of Nexi has commented:
“This transaction will create a large Italian PayTech company leader in Europe, a great technological and digital excellence with scale and capabilities to play an increasingly leading role in Italy and at an international level in a market, like the European one, that sees strong consolidation trends.”
Italy: All the Reasons to Switch to Digital Payments
Italy is one of the few countries that have continued favouring cash over digital payments in a world where paper money is slowly fading away. However, in attempts to escape the black economy and its shadows, the country is now becoming more and more receptive to the new digital trends.
Furthermore, the recent COVID-19 pandemic has certainly played a significant role in the move away from banknotes. Electronic payments have proven to be a safer alternative, a quicker solution, and a more secure way to do business and take care of personal finances. With the digital world taking over, 56% of financial institutions have prepared their businesses for digital disruptions and changes.
What Does the Merger Mean For the Fintech Business
The partnering between the two companies is a safe move that will ensure that Italian-based key business growth and development will be secured. In uncertain times where coronavirus poses a risk to many economies, governments are exploring every avenue to protect business against takeovers.
In September, Italy’s government encouraged and supported the London Stock Exchange to go forward with a deal for the sale of Borsa Italiana Group to a group comprising of names like Euronext, NV, Intesa Sanpaolo, and CDP.
The payments sector has seen a great deal of mergers recently. In fact, this is not Nexi’s first attempt to reach new levels of growth. Last month, the company partnered with UK-based FinTech Ebury to serve international cash management, FX risk management, and more.
The Future of the Payments Sector
Nexi and SIA are just an example of how the FinTech industry is sourcing new ways of staying flexible and responsive to the changes in the world. COVID-19’s influence worldwide has demanded a boost in scale and an introduction of new capabilities when it comes to payments providers. In a scenario where economic certainty is nowhere to be found, Nexi and SIA are taking measures to ensure stability and diversity.
It is likely that other industries such as the retail sector will follow the lead and attempt to create better, interconnected structures for doing business. A carefully analysed and calculated merger brings onboard stability and confidence on the market.
Beth likes to write more on the management side of eCommerce & Digital Marketing (as well as writing for Thinkable’s eCommerce News section, Beth is a digital Account & Project Manager).
Beth is the next-in-command at Thinkable, but as mentioned before, we’re more of a flat structure than a rigid hierarchy.