Optal co-founder and managing director Rob Bishop
A group of prominent figures in the Australian payments industry could miss out on the lucrative proceeds of a sale deal that might not proceed because of the economic lockdowns induced by the social crisis.
Optal Ltd, a Melbourne-headquartered payments provider, announced in January that it had agreed to sell its operations to WEX, a New York listed payments processor in the travel and healthcare industries.
WEX said on January 24 that it would pay US$1.7 billion (A$2.5 billion) for Optal and an associated company known as eNett to deepen its presence in the global travel bookings market.
Both Optal and eNett are heavily exposed to clients in the travel and hospitality industries – two of the sectors hardest hit by Covid-related lockdowns across the globe.
WEX, which suffered a 65 per cent slide in its market cap in March, is now trying to back out of the deal that was due to settle this month.
WEX argues that the sale agreement contains a clause that allows it to back out of the deal if there is a material adverse change in the eNett and Optal operations.
The backflip has riled shareholders of each of the target companies, who last month launched joint legal proceedings against WEX in a UK court.
While Optal is incorporated in England where it holds an electronic money licence issued by the UK Financial Services Authority, its corporate headquarters is in the heart of Melbourne’s CBD and its board is dominated by a circle of Australia’s most experienced payments executives.
The managing director is former Westpac and NAB senior executive Rob Bishop and its chairman is Andre Sekulic, the former head of Mastercard’s Asia Pacific operations.
Sekulic is also a director of the Development Bank of Singapore.
Another former Mastercard executive and the current chairman of Eftpos Australia, Leigh Clapham, is also a director of the company.
The sale agreement means that Optal’s directors and senior management are in line to take healthy slices of the sale proceeds if the deal completes.
Banking Day understands that Bishop and Sekulic each hold big stakes in Optal.
Optal also holds a 25 per cent stake in eNett, which means its shareholders could miss out on the bulk of the sale proceeds.
The majority owner of eNett is Elliot Management a global hedge fund owned by American billionaire Paul Singer.
eNett, which has operations throughout Europe and Asia, was founded by Melbourne entrepreneur Anthony Hynes, who is still managing director of the business.
Optal's main business is issuing virtual MasterCards to merchants in the travel and hospitality industry and leveraging proprietary technology to execute cross-border transactions in 34 currencies.
Its operations are intertwined with eNett’s payments platform.
It is uncertain whether WEX is able to invoke the material adverse change clause to exit the deal.
In a recent research report, Moody’s Investors Service observed that the MAC clause might exclude pandemics.
“There is considerable uncertainty about whether WEX will ultimately succeed in avoiding closure of the eNett acquisition or negotiating a lower purchase price,” the ratings agency stated in the report.
“The MAC definition under the purchase agreement excludes pandemics from consideration when determining whether a MAC has occurred.
“The clause does allow an exception in instances when an event such as a pandemic has had a disproportionate effect on eNett in comparison to other industry participants.”
Moody’s indicated the ultimate legal judgement “may require WEX to consummate the acquisition at the previously agreed upon price.”
Banking Day yesterday sought comment from Bishop who did not respond before this article went into production.