Kalixa acquisition underlines banking's unease around gambling

Kalixa acquisition underlines banking's unease around gambling

Tuesday, December 20, 2016 Posted by Andy McCarron
The payments business is bought by Singaporean fintech group

GVC has sold the payments arm it inherited with the BwinParty acquisition to Singaporean-based fintech investment firm Senjō Group for an initial €29m.

The transaction is expected to complete in the first quarter of 2017 depending on regulatory approvals. GVC will remain as a major payments-provision customer of Kalixa post-completion. It said it will wind down the separate Kalixa Pay wallet business.

The sale of assets to Senjō and the closing down of Kalixa Pay will have a neutral effect on GVC’s EBITDA.

In the year to December 2015, Kalixa generated revenues of €22.7m and a loss before interest and tax of €7m. The Kalixa business processes over €11bn of payments annually for more than 800 merchants.

If earnout targets are met, the total consideration could rise to €35.5m.

Senjō Group is a large fintech investment concern with offices around the world, including in the UK. Kalixa will be swallowed up by the businesses existing payments arm, Senjō Payments, which is an international card payments and processing business.

Gavin Lock, chief operating officer at Senjō, noted: “The acquisition of Kalixa fits well within Senjō Group’s strategy of building out a global payments ecosystem. We believe Kalixa will be complementary to our existing portfolio of payments businesses around the world and will create a combined group that leverages the best of both companies.”

Lock added that the deal would give Senjō a “significant bridgehead” in Europe, dispelling fears that a Singaporean entity might have any worries over Kalixa’s continued relationship with online gambling companies.

Kenneth Alexander, chief executive at GVC, said the sale was in line with plans announced earlier in the year.

Over at gambling consultancy Regulus Partners, analyst Paul Leyland said the deal was about “removing an operational headache” for GVC but he noted it was a “far cry’ from the €100m IPO that had been hoped for in some quarters.

He also suggested the nature of the buyer – a fintech group rather than a large banking concern – reflected continued queasiness within the banking sector with regards to the gambling industry.

“Regardless of point of consumption gambling legislation, if financial services provision to the online industry remains ‘specialist’ and largely reliant upon dotcom revenue for profit, payments will remain the operational and regulatory soft underbelly of the sector,” he added. “This is an issue boards, finance directors and regulators need to start considering with strategic priority.”

Totally Gaming says: Senjō will represent a new name for many in the gambling sector. It may be true that online payments provision to gambling operators remains something of a specialist area in terms of payments, but innovation in fintech isn’t necessarily coming from the large banking names. The hope is that the gambling industry can benefit from improvements coming from those working at the margins in both senses of the word.

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