Series-A Investment Opportunity:
International Payments Service Provider
PayCapital is raising expansion equity capital
for an established, Hong Kong headquartered,
profitable, debt-free payment service provider
Company Background established founder family currently holds 90% of the
The company is one of the two PSPs (Payment Service firm. As mentioned earlier, the founding family also
Providers) set up in 2010 by the same founder family, have a significant shareholding in Birchford, a 300-
with each PSP having a different role. It had minimal strong banking & payments technology firm with
operations until 2019, when it was rebranded and took presence across Asia, the Middle East and Africa. This
over all cash-linked products and services from the group IT firm develops world-class software products
other PSP firm of the Group. for payments routing, compliance and IMTS (Instant
Money Transfer System) while also acting as a SWIFT
Most of its direct competitors are traditional remittance
service bureau for corporates, financial institutions and
and payments firms with at least have one branch. This
governments.
company is tech-enabled to efficiently and innovatively
manage its operations, compliance & risk functions and Clients & Products
counts technology as one of its core strengths. The The company is serving retail and corporate clients,
technology is provided by Birchford (the IT firm of the financial institutions, banks and non-bank financial
Group), which develops advanced technologies that institutions. Its services include banknotes trading,
find applications in the payments and banking space. instant cross-border money transfer, Retail & Wholesale
The company is a payment generalist and is open to FX trading, wire transfers and wire transfers against
retail, corporate and institutional clients cash. In banknotes trading, while the company currently
has an 8% market share in Hong Kong, it is expected to
PSP Business Licenses
become the market leader in 2020 due to an existential
The company currently holds PSP regulatory licences in crisis underway at some of its larger competitors.
Hong Kong, Australia and New Zealand. It is in the process
of applying for similar licences in Singapore and Lithuania. Revenue
It is also evaluating PSP acquisitions in the UK, India, Because of the spin-off from the group flagship in
Malaysia and the Philippines. It will continue to explore late-2019, the company has no prior revenue. However,
new opportunities as they emerge. The company aims the revenue taken over from its group flagship was
to have a presence at least in ten countries by the end around USD 1.5m in 2019. For 2020, the expected
of 2021. revenue for the company headquarters in Hong Kong,
and the new branches in Australia, New Zealand,
Evolution
Singapore and India is estimated at USD 3.1m.
Since its inception in 2010, the company has evolved
The company is planning to acquire a market-leading
significantly from being an over-the-counter money
money exchange firm in Malaysia. It must be noted
changing operation to trading wholesale currencies,
here that the Malaysian financial audit practice is
opening retail operations and now owning its own IMTS
different from that in Hong Kong and other countries.
(Instant Money Transfer System). These products are
There, the transaction volume is accounted as revenue,
turning the company into a currency-trading and
not the earned fees and commissions. That is the
payments powerhouse with a multi-national presence.
reason why the revenue for Malaysia appears
Founder Family & IT Access overwhelmingly high compared to all other jurisdictions
in the table on the following page.
The founder family is spread across Asia, with roots in
Hong Kong and India, and real estate/corporate/
technology holdings in multiple countries. The well-
v20319 | PayCapital (HK) Limited | 2202 Richmond C Building | 109 Argyle Street | Mongkok | Kowloon | Hong Kong S.A.R. | +852 8176 0646
FINANCIAL OVERVIEW
2020 2021 2022 2023
REVENUE 931,496,738 1,284,690,991 1,691,136,175 2,324,730,688
All 3,055,000 4,907,500 6,231,550 7,730,515
Malaysia 928,441,738 1,279,783,491 1,684,904,625 2,317,000,173
GROSS PROFIT 12,411,417 17,777,335 23,152,596 30,972,517
All 3,055,000 4,907,500 6,231,550 7,730,515
Malaysia 9,356,417 12,869,835 16,921,046 23,242,002
EXPENSES -4,484,666 -5,435,054 -6,144,269 -7,101,877
All -747,785 -1,143,869 -1,228,500 -1,321,644
Malaysia -3,736,881 -4,291,185 -4,915,769 -5,780,233
NET INCOME 7,926,752 12,342,281 17,008,327 23,870,639
All 2,307,215 3,763,631 5,003,050 6,408,870
Malaysia 5,619,537 8,578,650 12,005,277 17,461,769
EBITDA 9,108,865 13,976,800 19,097,721 26,642,652
All 2,409,624 3,972,200 5,267,891 6,737,418
Malaysia 6,699,241 10,004,600 13,829,830 19,905,234
CASHFLOW 11,089,268 17,037,755 23,329,626 32,580,051
All 3,095,107 5,031,336 6,679,039 8,548,128
Malaysia 7,994,161 12,006,419 16,650,587 24,031,923
INVESTMENT OPPORTUNITY
The company has an approved and paid up capital of The majority of the fresh capital (> 90%) will be used
HKD 19,650,000. for acquisitions and liquidity. The remaining funds
will be used for branding & marketing.
The founder family currently owns 90% of the firm. A
10% stake was sold earlier in 2019 for USD 10m to a No dividends are planned at the moment as it is
private investor at an estimated business valuation anticipated that all profits will be re-invested, but this
of USD 100m. is subject to market opportunities.
The current funding round will be for USD 20m, of The founders are planning future funding rounds,
which USD 7m will be equity and USD 13m debt. primarily for liquidity purposes. That should provide
an exit opportunity for Series-A investors. However,
The current valuation by Price Waterhouse Coopers
they are also open for a trade-sale or a listing at
stands at USD 80m, and the founders are offering
some point of time in future.
8.75% equity for USD 7m.
v20319 | PayCapital (HK) Limited | 2202 Richmond C Building | 109 Argyle Street | Mongkok | Kowloon | Hong Kong S.A.R. | +852 8176 0646
REASONS TO INVEST
The company is established, profitable, debt- The company has an attractive market
free and has a Dun & Bradstreet Rating of 3A1 share in Hong Kong and is expected to
(this is for H&H, not Wirease). It delivers realise significant growth momentum from
operational excellence on a daily basis. 2020 onwards.
There are plenty of acquisition targets The founder family’s IT venture provides a
available to further increase the market critical IT capability. The company derives
share. The Hong Kong market is expected to significant benefits from tailored and
consolidate over the next 5 years. customised IT systems being built for it by
the group IT firm.
The main USP that will enable the firm’s growth The founder family is in the process of
is access to the technology capabilities acquiring a majority stake in a China-based
developed by the group IT firm, based on Fintech firm that can secure and guarantee
local knowledge in payments and the niche bank deposits overnight, which is crucial for
industry experience of the founder family trading banknotes among banks.
and the operations team.
Over years, the company’s operations team Investors may have preferred access to
has developed detailed (optimal) routing further funding rounds of the company or
tables that allow payments to be routed in a other ventures of the founder family.
cost- and time-efficient manner and in accordance
with the risk appetite of the correspondent
banks. This gives the company a unique edge
over the competition.
If you wish to learn more, please email investors@paycapital.hk
v20319 | PayCapital (HK) Limited | 2202 Richmond C Building | 109 Argyle Street | Mongkok | Kowloon | Hong Kong S.A.R. | +852 8176 0646
