eResearch | Last week, Nuvei (TSX: NVEI), a Canadian technology company focused on electronic payment solutions, went public on the Toronto Stock Exchange (“TSX”), raising $833 million (C$1.1 billion) in the largest tech IPO in TSX history. Two classes of shares were issued, the subordinate voting shares and the multiple voting shares.
Nuvei’s common stock started trading on the TSX at over C$45 per share, after pricing its IPO at C$34 the day prior. Nuvei initially priced its IPO at a range of between C$27 and C$30.
At the end of last year, Nuvei raised $270 million in equity financing from existing shareholders, Caisse de dépôt et placement du Québec and Novacap Investments, providing Nuvei a valuation of approximately $2 billion.
Caisse and Novacap initially invested in Nuvei in 2017, which provided Nuvei with an approximate valuation of $430 million.
In the S-1 Prospectus, Nuvei revealed plans to acquire all of the membership interest in Smart2Pay, a European payment solutions provider, to expand service offerings in Europe. The acquisition is expected to close this year as Nuvei awaits regulatory approval from the Dutch Central Bank.
Last year, Nuvei closed an $889 million acquisition of SafeCharge International, a European payment services company, representing a 25% premium for SafeCharge’s shareholders. The acquisition strengthened Nuvei’s payment technology capabilities while expanding operations to Europe.
Nuvei’s stock is currently trading at C$51.95 per share, a 53% increase from its listing price, with a market capitalization of C$6.8 billion and trading at an EV/Revenue multiple of 18.7x and an EV/EBITDA multiple of 57.8x.
Nuvei
Nuvei, previously known as Pivotal Payments, develops proprietary technologies that support high-growth mobile commerce and e-commerce businesses with tailored digital payment processing solutions.
Nuvei’s payment solutions are offered through its Native Commerce Platform, a cloud-based payment engine, capable of servicing 450 different payment methods and 150 types of currencies, across 200 global markets. The platform is currently offered in North America, Europe, Asia Pacific, and Latin America.
IMAGE 1: Nuvei Native Commerce Platform
The Native Commerce Platform includes various payment solutions, such as the:
- Proprietary Global Gateway, which serves as a single global connection point between merchants, financial firms, and customers.
- Independent Acquiring Platform, which supports global payments by routing transactions for clearing, settlement, and reconciliation.
- Global Payout Capabilities, which enables merchants to automatically disburse payment settlements across 150 different currencies.
- Streamlined Currency Management, which captures FX conversion fees by offering multi-currency pricing and payment processing to merchants.
- Advance Risk Management and Compliance Engine, which identifies fraudulent transactions, while assigning a risk score to each transaction based on over 180 different risk parameters.
Merchants only need a single integration with the Native Commerce Platform to start accepting payments globally across multiple channels, including (1) e-commerce, (2) mobile & in-app, (3) unattended, and (4) in-store.
IMAGE 2: Nuvei Omni-channel Payment Avenues
Nuvei Customers
Nuvei has developed payment processing solutions for more than 50,000 customers in various markets, including:
- Regulated Online Gaming
- Social Gaming
- Online Retail
- Online Marketplaces
- Digital Goods and Services
- Regulated Financial Services
- Travel
IMAGE 3: Nuvei’s Customers in High-growth End-Markets
For the year ended June 30, 2020, merchants on Nuvei’s platform recorded $35 billion in Annual Total Volume (“ATV”), with mobile commerce and e-commerce accounting for 71% of ATV.
Nuvei Financials
Nuvei generates revenue based on the sales and transaction volumes from its merchant partners, while also receiving subscription-based fees for its value-added services. The majority of Nuvei’s revenue streams are recurring, with significant cross-selling opportunities for its various solutions.
This past quarter, Nuvei experienced a significant increase in revenue due to the COVID-19 pandemic accelerating the adoption of e-commerce and digital payment solutions.
In the S-1 Prospectus, Nuvei stated:
“We believe the COVID-19 crisis will act as a catalyst in further accelerating mobile commerce and eCommerce transactions as consumers adapt to a “new normal” (including the decline in use of cash) and as merchants shift to contactless and mobile payments to ensure business continuity. We believe our expertise in digital payments underpinned by our global acquiring capabilities and robust fraud and risk management solutions positions us well to capitalize on structural changes in favor of mobile and online commerce.
In Nuvei’s most recent quarter, for the three months ended June 30, 2020, it reported Revenue of $83 million, a 64% increase year-over-year, with a Net Income of $14 million versus a Net Loss of $1.4 million in the prior year’s comparable period. However, the financials in the quarter benefited from a $21.4 million currency gain.
Payment Technology Market
The global payment processing solutions market is quickly growing as more industries leverage technology for end-market sales, while customers increasingly seek more efficient digital solutions for payment processing.
The COVID-19 pandemic accelerated the adoption of various e-commerce payment solutions, as numerous companies adapted towards online delivery to support contactless payments with customers.
According to MarketsandMarkets Research, the global payment processing solutions market was $74 billion this year and is expected to reach $121 billion by 2025, growing at a CAGR of 10.2% during the forecast period.
