December 3, 2023

Zepz owns the WorldRemit and Sendwave brands and employs approximately 1,600 people.

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LONDON — Zepz, owner of remittance companies WorldRemit and Sendwave, is pursuing mergers and acquisitions after laying off 26% of its workforce last month, the company’s chief executive told CNBC.

Zepz, valued at $5 billion, is one of Europe’s largest fintech companies, backed by major investors including Accel, TCV and Leapfrog.

The company enables users to send money from a smartphone or computer to someone abroad, who can receive it in their bank account, in a mobile wallet or as top-up for mobile airtime.

The service is a challenger to big banks and established remittance services such as Western Union, touting low fees and the ability to move money quickly. A close competitor is Wise, which also claims to offer cheaper international money transfers than banks.

Zepz chief executive Mark Lenhard said the company wanted to expand its business portfolio to capture a larger share of the global digital payments market.

Lenhard did not specify which companies Zepz was looking to acquire, but said the sharp decline in private fintech valuations made it an attractive time to start an M&A exploration.

digital wallet

According to the Bank of England, the total value of cross-border payments is expected to increase from $150 trillion in 2017 to more than $250 trillion by 2027. It’s a highly competitive industry with various players operating and taking a cut of every transaction consumers make.

A particular focus for Zepz’s products in the near term is digital wallets, Lenhard said, and the company plans to launch its first digital wallet “immediately.”

“We want to be a core financial center for a very specific segment of the market,” he told CNBC on Wednesday, with a particular focus on immigrant communities repatriating money back home.

The M&A push was in many ways a surprising move after the 13-year-old company slashed costs. In May, Zepz laid off 420 employees, about 26% of its global workforce.

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Zepz said it was laying off staff to shore up its business after its acquisition of U.S. remittance company Sendwave duplicated some positions.

However, at the time Zepz said it would not suspend hiring and was actively trying to fill 200 vacancies.

This is the second layoff at Zepz in less than a year. Zepz is said to be laying off about 5% of its workforce by June 2022 sky news.

“It’s difficult, it sucks, to cut staff at any time, but it’s certainly the right thing to do. We’ve expanded,” Lenhard said on Wednesday.

He added that he hopes the company’s forthcoming digital wallet product will convince customers to rely more on Zepz rather than using competing digital banking and other financial apps that have expanded their offerings to offer a wider range of services. The product.

For example, PayPal provides users with services such as mobile wallets, buying and selling of cryptocurrencies, buy now, and pay later.

Like other fintech companies, Zepz has been in cost-cutting mode as the industry faces intense pressure from plunging technology valuations and is driven by a host of macroeconomic headwinds including rising inflation and interest rates.

Still, Zepz says it is less vulnerable to these economic pressures than other companies in the space. World remittances are less affected by broader macroeconomic pressures than the banking sector, Lenhard said.

Through April 2023, Zepz’s overall client transaction volume is up 25% year-to-date, while its client growth has accelerated to an average of 30%, and in some areas as high as 80%, the company said.

The company achieved monthly profitability in the first half of 2022 and hopes to achieve full-year profitability this year.

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