REG - CAB Payments Hldgs - Update re Possible Offer and Q3 Trading Update

Cab Payments HoldingsAnnouncement

30/10/2024 07:00

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RNS Number : 1979K  CAB Payments Holdings PLC  30 October 2024

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION

 

THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS
AND MERGERS (THE 'CODE') AND DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM
INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE. THERE CAN BE NO
CERTAINTY THAT ANY OFFER WILL BE MADE, NOR AS TO THE TERMS ON WHICH ANY OFFER
MAY BE MADE

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

FOR IMMEDIATE RELEASE

 

 

30 October 2024

 

 

CAB Payments Holdings plc and its subsidiaries

('CAB Payments', the 'Group' or the 'Company')

 

UPDATE RE POSSIBLE OFFER FOR CAB PAYMENTS AND Q3 TRADING UPDATE

 

 

As announced on 10 October 2024, the Company received an unsolicited
non-binding proposal from StoneX Group Inc. ('StoneX') relating to a possible
cash offer for CAB Payments with a full share alternative in listed StoneX
shares (the 'Possible Offer').

 

Discussions with StoneX are continuing and StoneX and its advisers are
undertaking due diligence.

 

There can be no certainty that an offer will be made, nor as to the terms on
which any offer may be made.

 

In accordance with Rule 2.6(a) of the Code, StoneX is required, by not later
than 5.00 p.m. (London time) on 7 November 2024, to either announce a firm
intention to make an offer for CAB Payments in accordance with Rule 2.7 of the
Code or announce that it does not intend to make an offer for CAB Payments, in
which case the announcement will be treated as a statement to which Rule 2.8
of the Code applies. This deadline may be extended with the consent of the
Panel on Takeovers and Mergers (the 'Takeover Panel') in accordance with Rule
2.6(c) of the Code.

 

Update on Q3 trading performance

 

Revenue performance was in line with management expectations for July and
August, but marginally below those expectations by the end of September.
Whilst the Group continues to exhibit growth in volumes it has also
experienced a dilution in overall take-rates. This has been a result of the
mix of flows shifting towards lower-margin G10 currencies together with slower
than usual economic trading activity in our core markets.

 

The Company has also had extensive discussions with its International
Developmental Organisation ('IDO') clients during October. As previously
highlighted, IDO budgets have reduced this year but it was still expected that
volumes would increase in Q4 due to usual seasonality. There is now reason to
believe that this pick-up in volumes in Q4 is unlikely to materialise owing to
changing global macro-economic and political factors. The Group believes this
will reduce expected IDO volumes significantly in 2024 with an element of this
likely to be deferred into 2025.

 

In the nine months to 30 September 2024, the Group's FX & Payments volumes
showed 9% growth on a combined basis consisting of flat growth in emerging
markets (+10% when excluding NGN, XAF and XOF) and 15% growth in developed
markets. In comparison market-wide global payment volumes fell 6%.

 

Notwithstanding the above, the Group is making good progress in executing on
the four strategic pillars laid out at its half-year results in September
which will make a meaningful impact in 2025.

 

·      Network - strong hiring progress in local jurisdictions. MENA
licence process underway in Abu Dhabi and US licence process in final stages

·      Clients - commenced Central Bank outreach program with strong
relationships being built at the governor level

·      Platform - strong trade finance utilisation levels. Asset returns
performing well despite a reducing rate environment

·      Capital allocation - VISA integration progressing well. Expect to
launch FX derivatives in early 2025

 

The Group continues to invest for growth with operating costs (excluding
D&A) expected to track in-line with the expectations set out at H1. Given
the lower revenues, the positive operating leverage that was expected in H2 is
now not expected to materialise.

 

 

Neeraj Kapur, Group CEO of CAB Payments commented:

 

"I am pleased with the progress that has been made since setting out our
strategic framework in early September. We are continuing to diversify the
business and enhance relationships with our clients at a senior level,
including with key Central Banks. Our business model remains robust and we are
still winning market share despite short-term market headwinds.

 

"In terms of performance, the encouraging trading we saw early in H2, has
subsequently been impacted by slower than expected flows from International
Development Organizations and macro headwinds which are largely out of our
control. We are expecting some of this volume to be deferred into 2025.

 

"I previously flagged that 2024 will be a reset year. As a team we are working
hard to ensure that our strategic initiatives are put in place to deliver
maximum impact in 2025."

 

 

About CAB Payments:

CAB Payments Holdings PLC is the holding company for Crown Agents Bank Limited
('CAB'), a UK-regulated Bank providing FX and payments services, specialising
in global FX and cross-border payments for hard-to-reach markets.

 

Unlike traditional banks, CAB's unrivalled network, technology, and expertise
means it can move money in the most complex situations, to the most
challenging markets, for organisations that expect the most.

 

Trusted by Central Banks and Blue Chip organisations across the globe, CAB
connects its clients to underserved geographies rapidly, consistently, and
equitably so money can move efficiently to where it is needed. Offering a
single API for all FX and cross-border payments, covering 140+ markets and
currencies across 700+ currency pairs. Its extensive global network of
partners allows CAB to offer competitive prices and fast, reliable settlement.

 

CAB is one of the first banks to achieve B Corporation™ status. The bank was
awarded the Gold Sustainability Rating by EcoVadis in 2022 & 2023 - ranked
within the top 94% of 94,000 companies assessed across 160 countries and over
200+ industries.

 

The individual responsible for arranging the release of this announcement on
behalf of CAB Payments is Lesley Martin.

 

 

For further information, please contact:

 

 CAB Payments Holdings plc                                 ir@cabpayments.com
 Gaurav Patel, Head of Investor Relations

 Barclays Bank plc, acting through its Investment Bank     +44 (0) 20 7623 2323

(Financial Adviser and Joint Corporate Broker)
 Aamir Khan / James Woolf / Michael Hart / Anusuya Nayar

 Canaccord Genuity Limited (Joint Corporate Broker)       +44 (0) 20 7523 8000
 Emma Gabriel / Harry Rees

 FTI Consulting LLP (PR Adviser)                           +44 (0) 79 7687 0961
 Edward Bridges / Katie Bell

Allen Overy Shearman Sterling LLP is acting as legal adviser to CAB Payments
in relation to the Possible Offer.

 

Important notices

 

This announcement is not intended to, and does not, constitute or form part of
any offer, invitation or solicitation of any offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of, any securities, or the
solicitation of any vote or approval in any jurisdiction, whether pursuant to
this announcement or otherwise. Any offer, if made, will be made solely by
certain offer documentation which will contain the full terms and conditions
of any offer, including details of how it may be accepted.

 

The release, distribution or publication of this announcement in jurisdictions
outside the United Kingdom may be restricted by laws or regulations of the
relevant jurisdictions and therefore persons into whose possession this
announcement comes should inform themselves about, and observe, any such
restrictions. Any failure to comply with the restrictions may constitute a
violation of the securities laws or regulations of any such jurisdiction.

 

 

Disclaimer

 

Barclays Bank PLC, acting through its Investment Bank ('Barclays'), which is
authorised by the Prudential Regulation Authority and regulated in the United
Kingdom by the Financial Conduct Authority and the Prudential Regulation
Authority, is acting exclusively for CAB Payments and no one else in
connection with the matters set out in this announcement and will not be
responsible to anyone other than CAB Payments for providing the protections
afforded to clients of Barclays nor for providing advice in relation to any
matter referred to in this announcement.

 

Canaccord Genuity Limited ("Canaccord Genuity"), which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority, is acting
exclusively for CAB Payments and for no-one else in connection with the
matters referred to in this Announcement and will not be responsible to any
person other than CAB Payments for providing the protections afforded to
clients of Canaccord Genuity, nor for providing advice in relation to the
matters referred to herein. Neither Canaccord Genuity nor any of its
affiliates (nor any of its or their respective directors, officers, employees,
representatives or agents) owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, whether in contract, in
tort, under statute or otherwise) to any person who is not a client of
Canaccord Genuity in connection with the matters referred to in this
Announcement, or otherwise.

 

In accordance with the Code, normal United Kingdom market practice and Rule
14e-5(b) of the Exchange Act, Barclays and its affiliates will continue to act
as exempt principal trader in CAB Payments securities on the London Stock
Exchange. These purchases and activities by exempt principal traders which are
required to be made public in the United Kingdom pursuant to the Code will be
reported to a Regulatory Information Service and will be available on the
London Stock Exchange website at www.londonstockexchange.com. This information
will also be publicly disclosed in the United States to the extent that such
information is made public in the United Kingdom.

 

Publication on a website

 

In accordance with Rule 26.1 of the Code, a copy of this announcement will be
available (subject to certain restrictions relating to persons resident in
restricted jurisdictions) at www.cabpayments.com, by no later than 12 noon
(London time) on the business day following the date of this announcement. The
content of the website referred to in this announcement is not incorporated
into and does not form part of this announcement.

 

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