#280
In With The Old!

Published:

Mar 23, 2019


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Published:

Mar 23, 2019


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For years, a slew of high growth payments upstarts - from Stripe in the US, to Ant Financial in China and Adyen in Europe - have been grabbing share from incumbents. The upstarts have ridden the wave of e-commerce and digital payments, while squeezing margins and offering developer-friendly products. They've also commanded massive valuations - with Stripe valued at $20b, Ant at $150b, and Adyen over $22b.

However, the old boys are closing ranks. On Monday, FIS announced that it would buy Worldpay for $43b. This comes just two months after Fiserv and First Data agreed to their own $39b combination, bringing the value of this year's payments deals to a whopping $85b.

In many ways, the recent megadeals are a bet that, through scale and efficiency, the established players can protect their lunch by cutting costs and broadening their product offerings.

Worldpay was spun out of an embattled Royal Bank of Scotland in the aftermath of the financial crisis. Today, less than a decade later, the same business is being bought in the biggest financial services takeover since the recession - a deal equal to all of RBS’s current market value.

Despite the higher profile upstarts, Worldpay has also grown to become the largest merchant processor, processing over 40 billion transactions a year across 146 countries. JP Morgan Chase comes in second at 22 billion transactions.

So despite all the success of the new kids on the block, the older players may still have some tricks left to protect their turf!


Portfolio News


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In With The Old!


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Growing payments firms may pose systemic risk - The speed and scale of the FIS and Worldpay, First Data and Fiserv, PayPal and iZettle, Earthport and Visa deals is creating complex groups that may lack the sophistication of governance to manage them. Read more

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Select Financings


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