StoneX Continues Due Diligence for CAB Payments Buyout

On Monday, CAB Payments Holdings plc provided an update regarding the potential acquisition by StoneX Group Inc. and its third-quarter trading performance. StoneX, which had previously made an unsolicited non-binding proposal to acquire CAB Payments, is currently conducting due diligence. There is no certainty that any offer will be made or the terms of such an offer. Under the rules of the takeover code, StoneX must declare its intentions by 5:00 p.m. London time on November 7, 2024.

CAB Payments reported that revenue for July and August met management's expectations, but by the end of September, it fell slightly short. The company experienced growth in transaction volumes but also saw a reduction in overall take-rates due to a shift towards lower-margin G10 currencies and slower economic activity in core markets.

The company also noted that discussions with International Developmental Organisation (IDO) clients in October indicated a potential decrease in expected volumes for the fourth quarter of 2024. This is attributed to changing global macro-economic and political factors, with the possibility of some volumes being deferred to 2025.

For the nine months leading up to September 30, 2024, CAB Payments saw a 9% increase in FX & Payments volumes, with flat growth in emerging markets and a 15% increase in developed markets. This growth contrasts with a 6% decline in global payment volumes market-wide.

Despite these challenges, CAB Payments is progressing with its strategic plan, which was outlined in September. Efforts include network expansion with hiring in local jurisdictions and license processes in Abu Dhabi and the United States, client outreach to central banks, strong trade finance utilization on its platform, and capital allocation for VISA integration and planned FX derivatives launch in early 2025.

Neeraj Kapur, Group CEO of CAB Payments, commented on the company's resilience and market share growth amidst short-term market challenges. He acknowledged the impact of slower flows from IDOs and macro headwinds but expressed confidence in the strategic initiatives set to deliver results in 2025, referring to 2024 as a "reset year" for the company.

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Source: Investing.com