Railsr to Acquire Equals in All-Cash £283m Deal

Railsr, a leading embedded finance platform, has agreed to acquire Equals Group – parent of the Equals Money brand, in a £283m deal to create a new embedded finance powerhouse.

The deal brings together two of the UK's prominent fintechs, leveraging their expertise in embedded finance, cross-border payments and banking services. 

Railsr, which offers banking-as-a-service and card issuing solutions, will gain Equals’ robust suite of international payments, multicurrency accounts, and card products.

“The strategic fit of Equals and Railsr is compelling and the combination of their complementary strengths and capabilities is expected to enhance the customer proposition and create a leading embedded finance, foreign exchange and payments business,” say Joseph Knoll, Managing Director of TowerBrook, Tim Hanford, Co-President of J.C. Flowers and Dan Adler, Director of Railsr, in a joint statement.

The investor consortium, which also includes Railsr's existing backers, highlights Equals’ diverse portfolio of “high-performing, technology-enabled” products, “highly scalable” platform, and strong financial profile as key attractions. 

The combined group will serve a broad client base ranging from large corporates and financial institutions to SMEs and consumers.

Delivering Value in a Fragmented Market

The acquisition comes at a pivotal time for the embedded finance and payments sector, which is seeing rapid growth but also fragmentation. By joining forces, Railsr and Equals aim to create a more comprehensive offering and capture a bigger slice of the market.

“Today's announcement represents a major strategic step for Railsr at a pivotal moment in the development of the embedded finance market. We are creating a significant new player,” says Lord Hammond, Chairman of Railsr. 

“At a time when there is much fragmentation in the market, we will be well placed to provide an enhanced service to our customers.”

For Equals, the deal provides a route to accelerate its ambitions in a private setting, with increased access to growth capital. 

“Whilst the Board remains confident in the Equals Group's long-term prospects, we also acknowledge the challenges of the next phase of our strategy, and the need for scale to remain competitive in attracting larger target clients,” explains Alan Hughes, Non-Executive Chairman of Equals.

A Substantial Premium for Equals Shareholders

Under the terms of the acquisition, Equals shareholders will receive 140 pence per share in cash, representing a 37% premium to Equals' closing price on 31 October 2023, the last business day before the offer period began. 

The price comprises 135 pence in cash from BidCo and a special dividend of 5 pence per share.

“Earlier this year we received an initial proposal from the Consortium which was revised and improved in July with an all-cash offer of 135p. Today's recommended cash acquisition, valued at 140p, is a further improvement for shareholders,” says Hughes. 

“In recommending this transaction, the Board believes that it has secured a future for the Equals Group in a private environment while delivering greater value to shareholders than was ascribed to the Equals Group as a standalone business executing an independent strategy.”

The Equals directors intend to unanimously recommend that shareholders vote in favour of the scheme. The acquisition has also received support from Equals shareholders representing approximately 14.3% of the company's issued share capital.

Well-Positioned for Growth

The investor consortium, which will own the combined group, sees significant potential for further growth and innovation. 

“The Consortium believes the Combined Group is an ideal platform for continued growth and innovation in Fintech and we look forward to supporting the Combined Group's growth,” add Knoll, Hanford and Adler in their joint statement.

Equals CEO Ian Strafford-Taylor and Railsr CEO Philippe Morel will lead the combined group as co-CEOs post-completion. 

Commenting on the road ahead, Lord Hammond concludes: “I am looking forward, on completion, to working with Ian and Nigel as Co-CEOs. Fintech continues to be a major catalyst for economic growth and this new group, one of the largest embedded finance companies in Europe, will be well placed to contribute.”

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