Santander Bank announced an investment of $50 million in the fintech startup Ebury, one of the largest payment and currency platforms for SMEs. This investment, part of Santander’s digital strategy to accelerate its growth by taking stakes in companies, will strengthen its international trade offer and consolidate its position as the bank of choice for SMEs that operate internationally.
Santander Bank made the first step to take a majority shareholding in the Spanish fintech startup Ebury. The entity presided over by Ana Botín has put on the table more than $50 million (€45 million) to keep a minority part of the shares. The rest of the money will be paid out when the transaction will be completed over the next few months, following the approval from the regulator. With this first purchase of securities, the valuation of the currency exchange platform stands at $780 million (€700 million).
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Santander Bank in the foreign exchange segment
The bank wanted to sink its teeth into the foreign exchange segment in international payments and transfers. It decided to do it through the checkbook and not so much with its own internal development. Last November, the bank formalized the purchase of 50.1% of the startup. Founded in 2009 by Spaniards Juan Lobato and Salvador Garcia, it focuses on small and medium-sized companies that have to deal with international payments. The entity took control of the company, which it will let operate independently and even compete with.
The bank has now made the first disbursement of $51 million (GBP 40 million). It has thus acquired 6.4% of the shares of the fintech startup Ebury. The other $461 million (GBP 360 million), between a capital increase and the repurchase of shares from current partners, will have to be made after the final closing with the authorization of the regulator. There is no specific deadline, and in the annual report submitted to the National Securities Market Commission (CNMV), they simply stated that it will be in 2020.
Ebury raised more than $122 million in different financing rounds
The valuation resulting from this transaction is somewhat lower than the one reported in November: about $779 million (€700 million). This is a transaction between shareholders, so everything pointed to the fact that it has been signed at a certain discount compared to the full valuation of the company after the enlargement. Ebury, with offices in London, Madrid, and Malaga, closed last year, according to the same report, with a loss of $24 million (€22 million). It had $43 million (€39 million) in capital and reserves. To date, it had raised more than $122 million (€110 million) in different financing rounds with large Silicon Valley investors, such as Greylock, and other funds such as Vitruvian Partners.
According to Santander’s own figures, Ebury has more than 43.000 active SMEs on its platform, in 17 countries, and with a growth in the volume of transactions completed per client of more than 20% and total revenues of 45%. The Spanish bank does not want to absorb it, and therefore, the startup is maintaining its plans to go public in the medium term, although Botín and its team can always keep the ace up their sleeve to acquire the rest of the shares. Be that as it may, this is the largest purchase it has completed in the sector to date.
Santander to complete the digital sector
This independence is also seen in the next step that Santander will take with a new mobile application focused on international payments with currencies. It is called PagoFX, and after months of delay in authorization as a payment institution by the UK regulator, it is now being officially launched after an injection of $2.5 million (GBP 2 million) in initial capital. It aims to focus initially on private clients, and then to target the small and medium-sized business segment. This is exactly what Ebury is doing, although the focus is not only on currency management, but also on risk hedging or product import financing.
Ebury is not the only acquisition the bank has completed in the digital sector in recent months. The group has included in its perimeter, the car buying and selling platform on the Internet, Coches.com, 93% of which was incorporated at the beginning of this year. The price of this transaction, which aims to complete the offer for dealers and end-users through its consumer credit subsidiary, was not disclosed. The annual report stated that the book value is $20 million (€18 million).
Santander investment strategy
Aside from direct purchases, Santander is maintaining its strategy of investing in fintech startups in the US, Latin America, and Europe through its Innoventures arm. The fund is managed through a UK-based company which has increased its book value in the last year. In 2019, according to the report, it has risen from $96 million (€87 million) to $129 million (€117 million), while capital and reserves have more than doubled to $207 million (€187 million). It made a net profit of $15 million (€14 million).
Santander has invested in more than thirty high-growth companies. Last year it became a shareholder in the Mexican company Klar, which seeks to be the Mexican alternative to credit cards; in the US company Trulioo, which focuses on online identity verification; and in Securitize, which offers a global solution for issuing and managing digital assets with blockchain. The latter is co-founded and led by the Spaniard Carlos Domingo, former head of Innovation at Telefónica Digital.