Zepz, which owns the WorldRemit and Sendwave brands, has a total of around 1,600 employees.
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LONDON — Zepz, the owner of money transfer companies WorldRemit and Sendwave, is looking for mergers and acquisitions after laying off 26% of its workforce last month, the company’s CEO told CNBC.
With a valuation of USD 5 billion, Zepz is one of the largest fintech companies in Europe, backed by leading investors including Accel, TCV and Leapfrog.
The company allows users to send money from a smartphone or computer to people abroad, who can receive it in their bank account, mobile wallet or as top-up mobile airtime.
The service is challenging big banks and established money transfer services like Western Union, offering cheaper fees and the ability to move funds quickly. A close rival is Wisewhich also claims to offer cheaper international money transfers than banks.
Mark Lenhard, CEO of Zepz, said the firm wants to expand its portfolio of businesses in an effort to own a bigger piece of the global digital payments pie.
Lenhard did not identify which companies Zepz is looking to buy, but said the sharp drop in private fintech valuations made it an attractive time to start M&A exploration.
The total value of cross-border payments is expected to grow from $150 trillion in 2017 to more than $250 trillion by 2027, according to the Bank of England. It is a highly competitive industry with various players operating and taking a piece of every transaction a consumer makes.
According to Lenhard, Zepz is focusing on digital wallets in the near future, with the company planning to launch its first digital wallet “in the near future.”
“We want to be a major financial center for a very specific segment,” he told CNBC on Wednesday, with a particular focus on migrant communities that send money home.
The M&A push is in many ways a surprising move, as it follows significant cost-cutting at the 13-year-old company. In May, Zepz laid off 420 employees, equivalent to about 26% of its global workforce.
Zepz says it has cut jobs to consolidate its operations after its acquisition of US money transfer company Sendwave led to the duplication of certain roles.
Still, at the time, Zepz said it wasn’t suspending hiring and was actively trying to fill 200 roles.
It was the second time in less than a year that Zepz laid off employees. In June 2022, Zepz reduced approximately 5% of its workforce Sky News.
“Any time you fire an individual, it’s tough, it sucks, but it was definitely the right thing to do. We expanded it,” Lenhard said Wednesday.
He added that he hopes the company’s upcoming digital wallet product will convince customers to rely more on Zepz rather than use rival digital banks and other financial apps that have expanded their services to offer a much wider range of products.
PayPal, for example, offers users mobile wallets, cryptocurrency buying and selling, and buy now pay later installments, among other things.
Like other fintechs, Zepz has been in cost-cutting mode as the industry faces huge pressure from a slump in tech valuations fueled by a number of macroeconomic headwinds, including higher inflation and interest rates.
Despite this, Zepz says it has been less susceptible to these economic pressures than other firms in the space. According to Lenhard, world remittances are less affected by broader macroeconomic pressures than, for example, banking.
Zepz’s total customer transactions grew by 25% year-on-year from April 2023, the company said, while its customer growth accelerated to an average of 30% and as much as 80% in some areas.
The company, which achieved monthly profitability in the first half of 2022, is looking to achieve profitability on a full-year basis this year.