And the reason's i conclude this are because ' The Deal ' with VISA is exactly the type of deal I had been talking about and looking for .....and even to a degree has exceeded most of my expectations.
Apart from the observation that i had already called their missed ' Christmas ' window opportunity which had been much touted , the deal offers the ' Exclusivity ' to CRO whereby " FISERV will serve as the exclusive merchant acquirer for Cirallto " and which as Adrian stated :-
" puts Cirallto in a prime position to build its market share in the digital payments sector and is a significant milestone for the Company...with the agreement giving them the ability to compete with other global payment players and financial institutions targeting B2B customers and networks "
Now we can talk about the logistics of the ' End to End ' and double sided transactions which I spoke about several months ago all day long , but essentially the' kicker ' for me in the deal are the connections to FISERV who in actual fact came about from the ' brainstrust and foresight developed by the much respected Industry Private Equity and leveraged buyout player KKR ( Kolberg Kravis Roberts ) who now specialises in finance , leasing , banking and credit originating. So this will mean a lot for Cirallto .....especially when they ( KKR ) look to perhaps take a stake in them at some stage , and because ' walking the talk ' is what they do more often when they get into these deals by throwing their support behind their corporate plays and Industry initiatives.
And for those who don't already know , KKR was the firm behind the FIRST DATA buyout back in July 2019 in an all stock deal worth some US $22 Billion which created FISERV into what it represents today and are still its major shareholder holding over 16% of the Company. More recently of course KKR bought CBA's wealth management arm in Colonial First State for A $1.7 Billion or 55% of Australia's largest lenders in Commonwealth Bank.
And according to a current year study by the Australian Investment Council , Private Equity and venture capital groups have approximately A $13 Billion of ready available capital ready to invest in Australian Businesses that are QUOTE : " Desperately in need of funds due to the pandemic " with private equity and venture capital rising 16% to a record A $33 billion in Australia in the 12 months to June 2019....which according to Council was was the third successive year of increased investment from this sector.
Of course where it gets really interesting in further ' linking ' benefits from what the exclusive merchant originating FISERV brings to the table through its association with KKR , is that many many not be aware that KKR was Private Equity firm behind the buyout of MYOB for A $2.2 billion which was approved by the Federal Court back in May 2019 ........or only 2 months prior to FISERV's buyout of First Data.
Even before that you can see the interest and appetite KKR has with Australian Tech with their previous A $2.1 billion ( A$3.3 billion with assumed debt ) acquisition proposal for the aussie Telco Group Vocus back in July 2017 remembering also that Vocus was the Group behind the consumer brands DoDo , iPrimus , and SMB provider Commander , and who also acquired the Perth based solutions provider Amcom back in 2015 ahead of a A $3.75 merger with the M2 Group who in turn acquired Nextgen Networks in the same year for $860 million.
On top of all this , we also know that KKR was ' rumored ' to be kicking the tyres on an offer for Flexigroup as reported in the Australian back as recently as August 2020 and is ALSO the owner of the Aussie non-bank lender the Pepper Group which took it Private back in August 2017 for A $675.9 million via scheme of arrangement. Of course we also should all be aware that Pepper who was looking to shop a re-listing IPO back in early 2020 is Australia's largest non-bank financial lenders with assets in excess of approximately $10 billion and is expected to fetch an IPO listing price close to $1 billion based on market capitalisation when and if it lists. More importantly , KKR's total credit business operations come in at approximately US $66 billion in assets in 2017 with some $400 million in credit and transactions fees alone recorded in early 2018 year.
So whether you are Jerome Kolberg or Henry Kravis and George Roberts who are first cousins and best friends for 70 years and business partners for 43 of them , there is NO shortage of deals and no expense spared in the deals with this duo. And this Pedigree seems to have rubbed off on their appointed successor in Scott Nutell and Joseph Bae as co-presidents and who under these two Guy's are extremely committed to Asia with Korean born Bae and Kiwi born Nutell putting Australia and surrounding trading partners smack in the middle of their ' transformation ' business plans and no signs of them slowing it down. Remembering these Guy's ( KKR ) were the firm behind the Arnott's buyout for A$3.3 billion back in May 2019 which probably stems from it's original $25 billion takeover of RJR Nabisco back in the 80's.
So the bottom line is that there is plenty to like here with this deal and particularly the ' connectivity ' of FISERV with KKR and the HUGE businesses connecting the potential ' Faster ' Merchant acquisition numbers and supporting credit provision in rapidly expanding this model.
Suppose it doesn't hurt either to have had an esteemed ex-Australian Prime Minister and merchant banker in Malcolm Turnbull who joined the firm as a senior Advisor effective June 1st 2019 remembering that he ( Turnbull ) was involved in one of the first Internet service providers OzEmail buying it for a reported $500 k in 94 and then selling it off 5 years later for a humble and mere $57 million to MCI Worldcom. So in my opinion what's going on here at the present moment seems to absolutely dwarf that of which occurred in valuations back in the Dot Com era.
And so folds , the above rather in depth explanation into the history and the unnoticed connections to KKR are the reasons why I went out on a limb and took the opportunity to significantly increase my stake this morning , as I feel there will definitely be a significant ' Company Making ' additional deals just around the corner of the final inking of this current deal.
Continued best fortunes to everyone on their CRO investments and trades.....
Changing my sentiments now to a BUY from NONE.
(20min delay)