Santander has splashed out £350mn for a majority stake in alternative financier Ebury, but what are the key drivers behind the deal for the fintech company?
The bank has become a 50.1% shareholder in a new deal that was revealed this week, but Ebury will continue to operate as an independent entity.
Of the capital, £70mn will be spent on supporting Ebury’s plans to enter new markets in Latin America and Asia. It is not detailed how the rest of the money will be spent.
The bank expects a return on its invested capital of more than 25% in 2024, says a release from Santander.
Paolo Giabardo, chief commercial officer at Ebury speaks to GTR about how the deal was struck: “The main reasons for the deal are that Ebury has been growing very strongly for a number of years. We are mainly a European business with a sizeable presence outside of Europe. However, we want to be a leading global platform for mid-market corporates to trade internationally, so in that respect this partnership makes a lot of sense.”
He says the partnership enables Ebury access to infrastructure capabilities in new markets like Latin America, which is a key region for the company in terms of expansion, and to new products in global transaction banking services that it doesn’t currently offer to clients. It also gives Ebury vital capital to support its growth.
“When mid-market corporates in Asia, Europe and the Americas are thinking about who their trade services’ provider for international trade should be, they will immediately think of Ebury as a counterparty,” he says.
Santander serves more than 4 million SME clients worldwide, of which more than 200,000 engage in international business. Ana Botín, group executive chairman of Banco Santander, adds: “By partnering with Ebury, Santander will deliver faster and more efficient products and services for SMEs, previously only accessible to larger corporates.”
Ebury has 900 employees working in 22 offices around the world, with the majority in European markets. But to be dominant in global transaction services, having a presence across the world is a must. Giabardo says Ebury is “accelerating” its global growth plans but declines to quantify acceleration. “On both sides the point of this is to leverage the strengths of the other party, in order to create mutually beneficial value.”
Despite this significant shareholder change, Ebury will retain the same organisational structure and the company will continue to hire employees at a steady rate. “This year we have added a few hundred people to the team, but now we are focusing on bringing the market openings that we had in our plan forward,” he says.
In 2018, Ebury processed £16.7bn in payments for their 43,000 clients. Juan Lobato, Ebury’s co-founder and co-CEO previously told GTR that Ebury’s success is due to it filling the funding gap left by the traditional banking system with solutions tailored to clients’ needs. Ebury is no stranger to acquisition either, just last month the company revealed that it has acquired fintech firm Frontierpay, which specialises in international payroll solutions.
The news also follows the launch of the Santander-led Trade Club Alliance, a digital platform created to “matchmake” cross-border trading partners. The initiative was originally created by Santander in 2015 to connect businesses in Europe with Latin America. Following its success, the programme was rolled out worldwide.