CEO Mark Lenhard informed CNBC that Zepz, the money transfer unicorn, is aiming to enlarge its business via mergers and acquisitions. In May, the company, holder of the WorldRemit and Sendwave brands, dismissed 26% of its global staff in order to combine its activities. The digital payments group is looking to gain yearly profitability after accomplishing monthly profitability in the initial six months of 2022.
Zepz, the owner of money transfer businesses WorldRemit and Sendwave, is on the lookout for mergers and acquisitions after reducing its workforce by 26% last month, its CEO Mark Lenhard told CNBC. The company, which has a value of $5bn and is one of the biggest fintech firms in Europe, is supported by big name investors such as Accel, TCV and Leapfrog. It allows people to send money using a computer or phone, and the recipient can get it into their bank account, mobile wallet, or as a mobile airtime top-up. The company is rivaling large banks and conventional money transfer services such as Western Union by offering lower fees and quicker money transfers. Its primary competitor is Wise, which also claims to have lower international money transfer fees than banks.Lenhard reported that the firm wished to extend its portfolio of operations in order to claim a bigger share of the digital payments industry. He did not say which companies Zepz was aiming to purchase but said that the recent decrease in private fintech valuations had made it an appealing moment to start M&A research.
The Bank of England has forecast that the overall value of cross-border payments will grow from $150 trillion in 2017 to above $250 trillion by 2027. This is an incredibly competitive sector and there are a variety of players taking a portion of each purchase a shopper makes. Lenhard reported that Zepz's primary focus in the forthcoming future is digital wallets; they anticipate launching their first digital wallet soon. The company is aiming to become the primary financial center for a certain segment," he mentioned to CNBC on Wednesday, putting particular emphasis on migrants sending resources back to their homes. The move to pursue M&A is somewhat unexpected since Zepz recently conducted a period of cost reduction. In May, Zepz let go 420 workers, which constituted about 26% of its general staff.
Zepz revealed that following its acquisition of the U.S. remittances firm Sendwave, it had to cut jobs in order to consolidate operations due to overlapping roles. At the same time, the firm pointed out that it wasn't halting its hiring initiatives and still looked to fill 200 positions. This is the second mass layoff Zepz has had to implement in less than a year, with Sky News reporting that around 5% of its staff was fired in June 2022. Even so, Lenhard mentioned that even though it was difficult, it was the proper course of action. To further its capabilities, the digital wallet product that is set to be launched is expected to encourage more customers to become loyal to Zepz compared to other financial apps, which provide a multitude of services like PayPal. These range from mobile wallets, buying/selling of cryptocurrencies, and buying with deferred payments. Fintechs like Zepz have had to practice cost control due to a downtick in technology valuations stirred up by external economic challenges such as higher inflation/interest rates. Nevertheless, Zepz has stated that it is less affected by these issues in comparison to other companies in the same field, specifically in the realm of remittances. According to the firm, their customer transactions have increased by 25% YTD as of April 2023 and the customer base has expanded at an average of 30%, and as much as 80% in particular regions. The goal for this year is to reach year-long profitability, which they accomplished on a monthly basis in the first half of 2022.
Comments