Cuscal talks up mid-teens growth, market share; IPO pricing next week

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Each of those three segments is controlled by major banks with at least a 50 per cent market share – Cuscal is the biggest player outside the incumbents.

Cuscal is expected to fix pricing for its IPO next week, after the payments group’s executives and advisers zipped around the world to sell investors on the company and the coming “infrastructure-like” opportunity.Presentations being handed out from London, Hong Kong and Singapore to Sydney and Melbourne said Cuscal primarily earns its $300 million-a-year revenue from per-transaction fees it charges across its three core capabilities: issuing, acquiring and non-card payments.

Take for example, Cuscal’s “issuing” unit, which helps its clients make, clear and settle payments from debt cards, prepaid cards or pre-paid cards. The big banks control a 74 per cent slice of the $10.6 billion in market volume, while Cuscal has 8 per cent and smaller players have 18 per cent. In all, the entire business rests on 93 clients, about two-thirds of whom have at least two years left on their contracts. The longest ones have been with Cuscal for 40 years and only 2 per cent of the client revenue has churned over in the past three years, according to the presentation.

It’s also made a few M&A bets on the way. It seeded neo-bank 86 400 in 2019 and made a 120 per cent return when National Australia Bank came calling two years later. Earlier this year, it acquired data and open banking platform BASIQ as a strategic bet.Cuscal and BofA are presenting historical financials for the past three years and forecasts for just the current financial year in the presentations. The indicative enterprise valuation is 9.4-times to 9.

 

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