Network International to receive $35m MasterCard injection
Payments processor says it is also making strides into Saudi Arabian market
UAE payment processing firm Network International finalised a deal with its cornerstone investor MasterCard, which will see the US-based payments giant inject $35 million (Dh129m) into its business over the next five years, its chief executive said in an earnings call.
On the call with analysts after announcing its maiden half-year results as a listed company, Network International’s chief executive, Simon Haslam, said that the two organisations had finalised a commercial agreement under which MasterCard "will support the combined development of new products and solutions in the region".
"The agreement also includes a commitment from MasterCard to invest $35m through Network International over the next five years," said Mr Halsam.
He added that a sales and go-to-market approach had been agreed, which included "potential additional success-based payments from MasterCard".
Network International, which floated shares on the London Stock Exchange in April, reported a 5.1 per cent increase in underlying net income to $43.8m for the first six months of 2019 as revenue increased 12.4 per cent to $152.3m. However, profit from continuing operations fell 55 per cent to $15.8m, which the company blamed on a number of one-off costs related to its IPO, changes to incentive plans and amortising of costs relating to its IT transformation programme.
The company earned $111.5m, or 73 per cent of its overall revenue, from the Middle East during the six-month period, and renewed five-year deals with Emirates NBD and Emirates Islamic Bank. The remaining 27 per cent of revenue came from Africa - a payment processing market which is not as large, but is growing at a much faster rate - 21.6 per cent year-on-year, compared to 9.3 per cent in the Middle East.
It is also pushing ahead with plans to grow in Saudi Arabia, having been included in a new innovation sandbox created by the market's regulator, the Saudi Arabian Monetary Authority, earlier this year. Mr Haslam said the company has also set up a new legal entity in the kingdom, opened an office in Riyadh and has signed up new customers, with discussions ongoing with other potential Saudi Arabian clients.
He said that its work in Saudi Arabia has started with processing credit card payments, as 80 per cent of payment processing is currently done by banks themselves.
"So the opportunity exists as banks look to move from insourcing to outsourcing," he said.
The company is also looking to grow its presence in markets where there is a push for greater financial inclusion, such as Egypt, where a new state-backed debit card system, Meeza, has recently been introduced.
Mr Haslam added that although its "core strategy is purely organic", it will look at potential acquisitions.
"We will pursue strategic and disciplined M&A if it helps bring new product capabilities to our portfolio or strengthens our position in these markets," he said.
Network International's shares were trading 1 per cent lower at £5.89 by 3.50pm UAE time, but remain considerably above its £4.35 offer price. MasterCard was a cornerstone investor in Network International's listing, committing to buy $300m of the $1.4 billion worth of shares that were offered to investors.
Updated: August 14, 2019 05:06 PM