Nayax to Raise Debt and Makes Largest Acquisition in Its History
A major fintech deal: Nayax is acquiring smart parking company IPS Group for $350 million in cash. The transaction, partially financed through a $150 million debt raise, will expand Nayax's potential market by $85 billion. CEO Yair Nechmad: "We will offer cities a unified platform."
The fintech company Nayax (14370, +3.75%) announced today, Tuesday, its largest acquisition to date: the company will pay $350 million in cash for the American firm IPS Group, which specializes in smart parking technologies.
Nayax, a provider of cashless payment solutions, is acquiring IPS from the American private equity fund Windjammer Capital Investors, which bought the company in 2020 for an undisclosed amount.
According to Nayax, the acquisition represents a significant entry into the smart parking market and expands its operations in the autonomous commerce sector. The combination of operations will increase Nayax's potential market in the field of cashless payments by $85 billion, reaching $342 billion by 2029.
Nayax stated that the enterprise value of IPS in the deal reflects a 17x multiple on the adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) expected this year. With anticipated synergies of $8 million per year by 2029, the multiple drops to about 12. Nayax estimates that the deal will contribute immediately to its profits.
Financing the deal: Nayax's debt to increase
At the end of the second quarter, Nayax held cash and short- and long-term investments totaling approximately $304 million. To finance the acquisition, Nayax will raise about $150 million in debt. Consequently, the company will increase its leverage and total debt, which stood at $358 million at the end of the second quarter, primarily in long-term debt to bondholders. Nayax expects the net financial debt to EBITDA ratio to reach 3.8 upon completion of the deal in the fourth quarter of this year, and to drop below 3 by the end of 2027.
According to the announcement, IPS is a leading provider of payment-based smart parking solutions with over 20 years of experience and technology deployed in more than 250,000 parking spaces. Its solutions process millions of transactions annually for local authorities, universities, and private operators, including smart parking meters, mobile payments, and vehicle identification. Nayax plans to integrate IPS's technology into its existing markets, with a particular focus on Europe.
Yair Nechmad, Chairman and CEO of Nayax, stated:
"Cities operate some of the most complex and demanding autonomous commerce environments in the world, with strict regulatory requirements and infrastructure that needs to operate for years. The combination with IPS will allow us to offer cities a unified platform for management and payment in the urban space, and to connect the world of parking with electric vehicle charging solutions."
IPS CEO Chad Randall stated that the connection to Nayax will provide IPS with the resources to expand into global markets and continue developing its parking solutions ecosystem.
Nayax is traded on both NASDAQ and the Tel Aviv Stock Exchange with a market cap of $1.7 billion, following a 33% decline in its stock price since the publication of its financial reports about two weeks ago. This comes against the backdrop of the company lowering its forecast for the free cash flow rate relative to adjusted EBITDA.
