EML Payments is selling its subsidiary Sentenial, three years after acquiring it and after taking a big write-down on a business it acknowledged has not lived up to expectations.
EML announced on Friday that it has signed an agreement to sell Sentenial to payments company GoCardless, subject to regulatory approvals.
Sentenial provides real-time payment services to UK and European banks. also has a subsidiary Nuapay that operates in the open banking market.
EML acquired Sentenial in 2021 for A$109 million. In its 2022/23 accounts it included a $69.2 million impairment in relation to the acquisition.
The financial report said: “The business has continued not to achieve the original acquisition plan. This, combined with longer lead times being experienced on B2B sales, has resulted in the group determining that impairment indicators for the business exist and the group has prepared detailed impairment assessments.”
The sale price is $54.1 million. The sale includes a “potential downward price adjustment linked to ongoing key contract performance in the period leading up to the sale” and an earn-out based on recurring revenue from a new contract signed this year.
After a couple of bad years of performance and ongoing problems with regulators, EML is scaling back its business to what it hopes will be profitable core activities.
In January it put another subsidiary, PFS Card Services Ireland Ltd, into liquidation after a strategic review of the business concluded that it was “no longer commercially viable or sustainable”.
PFS Group, which includes Irish and United Kingdom businesses, was acquired in 2020 for £226 million upfront and £55 million on an earn-out basis. EML’s 2022/23 financial report included a $193.7 million impairment in relation PFS.
The UK business is not affected by the liquidation and is being separated from the Irish business.
GoCardless ANZ general manager Luke Fossett said in a statement that the acquisition of Nuapay would allow the company to meet demand for more comprehensive payment solutions from Australian and international businesses.
Fossett said: “The combination of both organisations will create a full service bank payment provider that will help businesses collect and pay out via direct debit and PayTo.”
The company is hoping to use the acquisition to get into new areas, such as payroll, utilities, insurance and gaming.