Payments Companies Generating Substantial Valuations in Early 2019

While public markets saw a significant cutback in IPOs during January, the government shutdown had limited effects upon the M&A activity. Tech-enabled services, specifically payments companies, saw several deals of significant value, including the landmark acquisition of First Data by competitor Fiserv. The fintech space, in particular payments and processing, has seen a number of deals in the billions of dollars over the last 12 months. The shift towards streamlined and more cost-effective transaction processing is clearly being noticed by buyers, some of whom represent the old guard in the space.

In late January, Paygent, a payment collection company geared towards consumer facing e-commerce companies, was acquired by business information technology company NTT Data (TSE:9613) for $57.5 million.

Since December, credit card powerhouses, Visa and Mastercard, have been engaged in a bidding war over Earthport, a London-based payment services provider. As of early February the highest bid has come in at $319.8 million from Visa, which now has the backing of the Earthport board.

Earlier in 2018, mobile payments provider iZettle, was acquired by digital payments and technology platform PayPal (NasdaqGS:PYPL) for $2.2 billion.

Also, in December of last year, Travelport Worldwide (NYSE:TVPT), a travel commerce platform and digital payments provider, was acquired by an investor group led by activist fund manager Elliot Management for $4.4 billion.

Finally, payments and fintech behemoth Fiserv (NasdaqGS:FISV) acquired its rival First Data (NYSE:FDC) in a megadeal valued at $41.9 billion dollars; the largest deal in the space to date.

The abundance of capital flowing into the digital payments processing and payment-related space signals that investors are taking note of this growing threat to the established system and view the space as poised for continued growth.