Pine Labs has held initial discussions to buy out the Asian business of beleaguered German payments company Wirecard, according to three people aware of the talks.
Wirecard is a German payment and risk management service provider that filed for bankruptcy last month after it was revealed that $2 billion from its balance sheet had gone missing over an alleged accounting fraud.
“Multiple other players have also expressed interest in the company’s assets in the region,” said a person aware of the conversations. “The legality of the matter still has to be seen,” he said.
The scandal led to the resignation and subsequent arrest of Wirecard CEO Markus Braun in an accounting-fraud probe. He has since been released on bail, Bloomberg reported.
Sources close to the matter said that enquiries about the sale have been made by at least four companies including Hitachi Payments and Atos-backed Worldline Technology. It’s been reported by the Financial Times that Wirecard’s various businesses globally are up for sale including its America business.
Headquartered in Singapore, Wirecard’s Asia business services about 20,000 merchants in India, Singapore, Indonesia, Hong Kong, Australia, and Malaysia markets among others, as per disclosures made by the company to media outlets earlier this year.
The ongoing litigation, however, could see the Germany-based Wirecard lose several merchants and partners especially in India before a buyout is finalised with a local player as uncertainty clouds the immediate future of such partnerships, sources said. Hence, they said, that the prospective companies would only advance talks when the details of litigation become clear from the various ongoing regulatory proceedings initiated against the company at various international jurisdictions including Singapore.
“The discussion is still in very early stages and it’s obviously challenging as there is an ongoing litigation against the company,” said one of the sources cited above. “There is also concern that Wirecard may lose its customers during any process of migration due to these proceedings.”
Read: Scandal-hit Wirecard files for insolvency
The payments firm came under the scanner of regulatory authorities across the globe including Germany, Singapore and the Philippines, after it came to light that the company had been artificially inflating its balances. Previously, Wirecard in 2015 had paid an estimated $300 million to acquire the payments business of Indian ecommerce player Great India Retail, as reported by the Financial Times.
“Pine Labs is a leading payment and instalment provider in India and South East Asia. We continue to expand our footprints. We wouldn’t like to comment on this topic,” Amrish Rau, CEO, Pine Labs said in a statement. Wirecard AG is not making any statements at this time. Worldline and Hitachi Payments didn’t immediately respond to ET’s emailed queries. We will update the story as they respond.
Mastercard-backed Pinelabs has had partnerships with Wirecard for its India business, as per sources. Apart from its payments business in India, Pine Labs also has a strong presence in the merchant payments space in Malaysia and Singapore.
The partnership could help the company expand its reach in the rapidly digitising South Asian payments market where Wirecard has banking tie-ups and requisite regulatory permissions to ply business, as per industry observers that ET spoke with.
The interest also comes at a time when several Indian companies with global backers such as Facebook, Walmart and Alibaba among others have moved the needle on acquiring small businesses onto their payments platforms to offer value-added services such as invoice management, digital accounting and access to quick credit.
Pine Labs has over 1.5 lakh merchant tie-ups in 370 Indian cities and processes close to $30 billion worth of payments at 4.5 lakh retail points, according to the company.
Last week, Southeast Asian ride-hailing and payments company Grab said it had put a partnership with Wirecard on hold. The two companies had struck an agreement in March under which Wirecard was to process transactions made via the GrabPay e-wallet, starting with markets in Malaysia, the Philippines, and Singapore.
Leave a Reply