Britain’s online money transfer firm, WorldRemit has okayed a plan to buy Africa-centred app-based remittance company, Sendwave.
According to an insider aware of the sale, the buyout is worth more than $500 million both in cash and stock deal.
The sale comes hot in the heels of coronavirus pandemic which has triggered a surge in demand for digital banking.
The company’s combined value is now estimated to be valued at more than$1.5 billion, a source aware of the sale told Bloomberg but insisted that the information remains private.
In an interview, WorldRemit Chief Executive Officer Breon Corcoran said that he is optimistic the company’s shift to digital banking will be permanent.
“What we saw immediately after lockdown orders is a real acceleration toward digital with the rate of new account activations more than doubling this year,” he stated.
He added that “This is a fast-growing part of the broader payments space and increasingly our businesses will be viewed as more akin to Venmo or Paypal.”
The combined revenues for both companies have been boosted by over 50 percent to a tune of $280 million for the last 12 months ending in June 2020.
Under a similar period in 2019, customers for both firms transferred $7.5 billion.
With these projections, the WorldRemit boss insisted that the company will continue looking for acquisitions adding that it has no initial public offering.
With Sendwave’s new acquisition, the UK-based online money transfer firm will have a bigger footprint in the African market.
Sendwave since its inception by a startup, Y Combinator has seen millions of dollars sent from North America to African countries such as Ghana, Nigeria, Senegal and East Africa in the past years.
Despite its acquisition by World Remit, Sendwave will operate independently and key its management, staff and partners.
WorldRemit was founded by Dr Ismail Ahmed in 2010 as a result of struggling in finding a way to send money back home in Somalia. He was at the time pursuing his master’s degree at the London Business School.
Today, WorldRemit’s partners are Accel and TCV, early backers of Facebook Inc.
The World Bank has, however, warned that there will be a global reduction of remittances by 20% as a result of the pandemic. This is despite the shift in digital banking.
Migrant workers have low wages at the moment which also affects their remittances back home to their families. An estimated $445 billion in 2020 is projected to be wired back in the middle-income countries.
However, the World Bank has projected that this figure will rise to $470 billion in 2021.
