REG - Alpha Group Intl PLC - Acquisition of Cobase

Alpha InternationalAnnouncement

12/09/2023 07:00

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RNS Number : 0737M  Alpha Group International PLC  12 September 2023

12 September 2023

Alpha Group International plc

 

("Alpha" or the "Group")

 

Acquisition of Cobase

 

Leading Multibank Platform joins Alpha Group

 

Alpha Group International plc today announces that it has entered into a
conditional agreement, pending approval by the Dutch Central Bank, to acquire
circa 85% of Financial Transaction Services B.V., trading as "Cobase", a
leading multibank connectivity platform. The initial consideration for the
acquisition is €9.4m (£8.0m) in cash, with the remaining stake to be
acquired via a performance-based earn-out between 2025 and 2028.

 

About Cobase

 

Founded in 2017, Cobase is an innovative, cloud-based provider of bank
connectivity technology that enables corporates to manage their banking
relationships, accounts, and transaction activity via one single interface. In
doing so, the company unlocks significant operational and financial
efficiencies, especially for international businesses with multiple banking
counterparties across the world.

 

Without Cobase, companies have to manage multiple platforms and integrations
across an array of banks, significantly reducing the efficiency and visibility
with which they can manage their payments, cash management and treasury
functions. The more banks and accounts a company has, the more challenging
this becomes.

 

Companies can utilise Cobase's solution either directly through its platform
or via its off-the-shelf ERP connections, with widely used solutions such as
Oracle Netsuite, Microsoft Dynamics and SAP S4/HANA. The ease and simplicity
with which this connectivity can be offered is a key differentiator in a
marketplace where it is typically only achieved through enterprise-grade
Treasury Management Systems ("TMSs"). Such systems require expensive and
resource-intensive manual integrations with separate banking and payment
providers, as well as separate memberships with networks such as SWIFT. As a
result, research of Alpha's existing client base shows that less than 10% are
using a traditional TMS. Cobase however enables companies to leapfrog these
barriers through its unique approach of being a software business, whilst also
holding its own regulatory statuses and SWIFT membership. Alongside its bank
connectivity, key features include a Central Payments Hub as well as a Cash
Management and Treasury Management module. This makes Cobase a flexible and
accessible option for corporates that would benefit from many of the features
of a TMS, but have been put off by the time, costs and expertise traditionally
required to implement and maintain one.

 

The company was founded in 2017 by Jorge Schafraad, with initial funding from
ING Ventures after the concept was successfully proven in an ING Accelerator
program. Currently the company employs a team of c. 30 and is headquartered in
Amsterdam, The Netherlands. The platform has benefitted from significant
further investment from ING Ventures, Credit Agricole Corporate and Investment
Bank, Nordea and Cobase's technology partner Redmath BV, and a visionary
management team, creating an innovative multibank platform that has over 500
bank connections across more than 80 countries. At the time of writing its
current revenue is solely from SaaS subscription fees, generating recurring
revenues of circa £2m per annum. It has a client base of over 100 corporate
groups across the world, reflecting over 50% growth in the last 12 months.

Clients can either utilise Cobase through the company's own portal or mobile
app, or from within their own ERP system by sending instructions via host2host
or API connectivity.

 

Strategic Rationale

 

Alpha and Cobase's offerings are highly complementary with one another, and
the Board believes there are opportunities to amplify one another's growth by
leveraging and sharing each other's unique capabilities and experience.
Indeed, analysis has shown that 80% of Cobase's existing client base falls
within Alpha's own target market, highlighting the strong potential for mutual
value adds.

 

Going forward, Cobase will retain its team and continue to operate under its
own brand and management whilst its proprietary technology will help to
accelerate Alpha's digital proposition and enable us to become increasingly
more integrated with our clients by providing a more holistic treasury service
around our core FX risk management proposition. This will, in turn, enable
Alpha to provide more value to existing clients, increase wallet share and
retention. Additionally, it will naturally allow Alpha to attract new clients
for whom bank connectivity is an initial purchasing driver, as is evidenced by
the 100 corporates who are already using Cobase. At the same time, we see an
exciting opportunity for the Cobase team to leverage the scale and experience
of Alpha's global sales team, as well as the cross-selling opportunities with
Alpha's own client base.

 

Speaking on the acquisition, Morgan Tillbrook, CEO and founder of Alpha Group,
said:

 

"Whilst we have had plenty of opportunities to make acquisitions and external
investments, we have very high expectations for ourselves and our investors.
The fact that after more than six years as a public company and after
considering numerous acquisition opportunities, this is our first investment
of this kind is ultimately a testament to the company that Cobase have built,
and the strength of the alignment the company has with our business. I am
delighted to welcome Jorge and his team to Alpha and have been incredibly
impressed by the technology they have built. I am excited by the opportunity
to work together to accelerate the growth of both businesses and the strong
mutual value it will bring to our client bases. Our strong cash generation has
given us the opportunity to acquire this highly synergistic platform, and we
will continue to analyse the market and review M&A opportunities within
our wider capital allocation strategy."

 

Jorge Schafraad, CEO and founder of Cobase, said:

 

"We are delighted to join the Alpha Group as they are a client-driven and
innovative company in a field adjacent and closely aligned to ours. They have
clearly achieved a leading position in their market and are as such an
enviable partner, and we are convinced that this will unlock exciting new
opportunities for our customers, partners and team going forward. All services
we currently offer will remain in place for our existing and new clients and
we look forward to introducing additional features, products and services in
the near future."

 

 

Enquiries:

 

 Alpha Group International plc                  Via Alma PR

 Morgan Tillbrook, Founder and CEO

 Tim Powell, CFO
                                                +44 (0) 20 3100 2000

 Liberum (Nominated Adviser and Joint Broker)

 Max Jones

 Ben Cryer

 Kane Collings
                                                +44 (0) 20 7418 8900

 Peel Hunt (Joint Broker)

 Neil Patel

 Paul Gillam

 Richard Chambers
                                                +44 (0) 20 3405 0205

 Alma PR (Financial Public Relations)

 Josh Royston

 Andy Bryant

 Kieran Breheny

 

Notes to editors

Alpha is a high-tech, high-touch provider of enhanced financial solutions
dedicated to corporates and institutions operating internationally. Working
with clients across 50+ countries, we blend intelligent human capabilities
with new technologies to solve complex problems across three key areas: FX
risk management, global accounts and mass payments.

Key to our success is our team - over 350 people based across seven global
offices, brought together by a high-performance culture and a partnership
structure that empowers them to act as owners of our business.

Despite being an established business listed on the London Stock Exchange, we
remain relentlessly focused on maintaining the same level of operational
agility and client focus we had when we first started in 2009. This dynamic,
combined with the passion of our people, have enabled us to make a substantial
and enduring difference to our clients, and deliver a growth story to match.

 

 

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