What's going on?
On Thursday, Adyen – a Dutch company that helps companies including Netflix and Uber process payments – announced its plans for an Initial Public Offering (IPO). The company could be worth as much as $11 billion.
What does this mean?
Adyen works directly with credit card companies like MasterCard – moving money from customers’ card payments into businesses’ coffers all around the world. It’s helped major companies to efficiently handle cross-border and multi-currency payments and recently gained a license to become an acquiring bank in Europe, meaning that it can process payments almost instantly and not wait for large banks.
With a growing number of classy clients – plus soaring revenue and profit margins – Adyen’s targeting a share price that will value the company between $7-11 billion (tweet this). At the low end, it’s nearly three times as high as the company was valued in a 2015 fundraising round.
Why should I care?
For markets: You can go your own way…
In an IPO, companies generally rely on investment banks to manage how the company’s shares will be sold and distributed to investors. A company that bucked this trend is Spotify, which opted for a direct listing of its stock (i.e. no investment banks). Adyen’s route is more traditional – but like Spotify, it won’t be issuing new stock to raise funds for the firm. Adyen’s already profitable and says it only needs to spend some 5% of its annual profits to grow the business sustainably.
The bigger picture: The payments sector’s having a moment.
PayPal – one of Adyen’s biggest competitors – last week agreed to acquire Sweden’s iZettle, a startup that manages card payments for small businesses, for $2.2 billion. However, this all looks pretty small fry when compared with China’s main digital payments processor, Ant Financial – which just completed a fundraising round valuing the company at $150 billion. It may be a prelude to Ant’s own IPO.