$5 billion fintech Zepz looks to take on rivals like PayPal with digital wallet, M&A plans

LONDON — Zepz, the proprietor of wealth transportation firms WorldRemit and Sendwave, is connected the hunt for mergers and acquisitions aft cutting 26% of its workforce past month, the company's CEO told CNBC.

With a $5 cardinal valuation, Zepz is 1 of the largest fintech companies successful Europe, backed by starring investors including Accel, TCV and Leapfrog.

The institution enables users to nonstop wealth from a smartphone oregon machine to radical abroad, who tin person it successful their slope account, mobile wallet, oregon arsenic a mobile airtime top-up.

The work is simply a challenger to ample banks and established wealth transportation services similar Western Union, touting cheaper fees and the quality to determination funds rapidly. A adjacent rival is Wise, which besides claims to connection cheaper planetary wealth transfers than banks.

Mark Lenhard, Zepz's CEO, said the steadfast wanted to turn its portfolio of businesses successful an effort to ain a larger portion of the planetary integer payments pie.

Lenhard didn't place which companies Zepz was looking to buy, but said the crisp slump successful backstage fintech valuations made it an charismatic clip to footwear disconnected M&A exploration.

The wide worth of cross-border payments is forecast to summation from $150 trillion successful 2017 to implicit $250 trillion by 2027, according to the Bank of England. It's a highly competitory manufacture with assorted players operating and taking a portion of each transaction a user makes.

A peculiar absorption for Zepz product-wise successful the adjacent word is integer wallets, Lenhard said, with the institution readying to motorboat its archetypal integer wallet "imminently."

"We privation to beryllium a halfway fiscal hub for a precise peculiar segment," helium told CNBC Wednesday, with a peculiar absorption connected migrant communities sending funds home.

The propulsion into M&A is simply a astonishment determination successful galore ways arsenic it follows a important magnitude of outgo simplification astatine the 13-year-old company. In May, Zepz laid disconnected 420 employees, equating to astir 26% of its planetary workforce.

Zepz says it chopped the jobs to consolidate its operations aft its acqusition of U.S. remittances steadfast Sendwave led to a duplication of definite roles.

Still, astatine the time, Zepz said it wasn't pausing hiring, and was actively trying to capable 200 roles.

It marked the 2nd clip successful conscionable nether a twelvemonth Zepz laid disconnected staff. In June 2022, Zepz chopped astir 5% of its workforce, according to Sky News.

"Any clip you're laying disconnected individuals it's hard, it sucks, but it was surely the close happening to do. We've expanded things retired of that," Lenhard said Wednesday.

He added that helium hopes the company's upcoming integer wallet merchandise volition person customers to trust much connected Zepz, alternatively than utilizing competing integer banks and different fiscal apps which person grown their services to connection a overmuch wider scope of products.

PayPal, for example, offers users mobile wallets, the buying and selling of cryptocurrencies, and bargain now, wage aboriginal installment loans, among different things.

Like different fintechs, Zepz has been successful cost-cutting mode arsenic the manufacture faces immense unit from a slump successful exertion valuations, stoked by a big of macroeconomic headwinds including higher ostentation and involvement rates.

Despite this, Zepz says it has been little susceptible to those economical pressures than different firms successful the space. World remittances is little impacted by broader macroeconomic pressures than, say, banking, according to Lenhard.

Zepz's wide lawsuit transactions are up 25% year-to-date arsenic of April 2023, the institution said, portion its lawsuit maturation accelerated to 30% connected mean and by arsenic overmuch arsenic 80% successful definite areas.

The company, which deed monthly profitability successful the archetypal fractional of 2022, wants to execute profitability connected a full-year ground this year.

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