WorldRemit Ltd., a U.K. online money transfer company, has agreed to buy Africa-focused, app-based remittance firm Sendwave as the global pandemic intensifies demand for digital banking.

The cash and stock deal is worth more than $500 million, according to a person with knowledge of the matter. The combined company will be valued at more than $1.5 billion, according to one of the people, who asked not to be identified as the information is private.

WorldRemit Chief Executive Officer Breon Corcoran said the company is betting that the pandemic-fueled shift to digital banking will become permanent. “What we saw immediately after lockdown orders is a real acceleration toward digital,” with the rate of new account activations more than doubling this year, he said in an interview.

“This is a fast-growing part of the broader payments space and increasingly our businesses will be viewed as more akin to Venmo or Paypal,” he said.

The Sendwave acquisition will help bolster WorldRemit’s coverage of Africa. Sendwave, backed by startup incubator Y Combinator, allows customers in North America and Europe to send instant payments to friends and relatives in countries including Ghana, Nigeria, Senegal and East Africa. Sendwave will continue to operate as an independent business and retain its management, employees and key partners, the companies said.

Founded in 2010 by Ismail Ahmed, a former London student who had struggled to send money home to Somalia, WorldRemit’s investors include Accel and TCV, early backers of Facebook Inc.

Payments Decline
While the pandemic has pushed more people to bank digitally, they are sending less money overseas, according to the World Bank. The organization is predicting a 20% decline in global remittances this year because of the economic crisis stemming from the pandemic. Decreasing wages and employment opportunities for migrant workers who typically send money back to family and friends are projected to drag down remittances to low and middle-income countries to $445 billion this year. The World Bank estimates that figure will recover to $470 billion next year.

WorldRemit and Sendwave have increased their combined revenues by more than 50% to $280 million in the 12 months ending in June compared with a year earlier, as their customers conducted about $7.5 billion in transfers, the companies said.

Corcoran said WorldRemit would continue to look for acquisitions and has no current plans for an initial public offering.

Source: https://www.bloomberg.com/