There was certainly no shortage of companies that went public through special-purpose acquisition companies, or SPACs, recently. And with the recent announcement of Payoneer’s pending merger with SPAC, it doesn’t look like we’ve seen the end of it. In that Fool Live video clip, recorded on February 8, Fool.com contributor Matt Frankel, CFP and Industry Focus Presenter Jason Moser discusses Payoneer’s business and why it’s worth keeping on your radar.
Jason Moser: Matt, we have another SPAC offer in the mix here.
Matt Frankel: Imagine that. [laughs]
Moser: It’s just another day and another SPAC, right? This time, it is for a company that we are talking about that cross-border opportunity, and that particular company that is going to go public via SPAC is one that may not be very familiar to many people. I didn’t really look at that much. But I mean, it’s an interesting looking business. I’m just not sure what to do with it yet, but Payoneer. I know you did some research on this company. Tell us what you found.
Frankel: First about SPAC. It is being released by a company called Acquisition of FTAC Olympus (NASDAQ: FTOC). That’s a lot, but it’s Betsy Cohen’s SPAC. She is a financial heavyweight there. She founded Jefferson Bank. She founded The Bancorp (NASDAQ: TBBK), which is a commercial bank of branches, a truly innovative platform there. This is the fourth SPAC she has made public. She wore SPACs before going into fashion. [laughs] So, in fact, we have some kind of background, which is really rare in this context. Just to go over the previous one, she opened the public CardConnect in 2015, which ended up being acquired by First Data (NYSE: FDC), so the shareholders made good money from it. The second was a company called International Money Express (NASDAQ: IMXI), which is still marketed publicly – this was in 2017. It is about 60% above the IPO price of SPAC. Then Paya (NASDAQ: PAYA) or Paya, I don’t know exactly how it is pronounced just because I’m reading it – it was made public in 2019 and is about 40% above the SPAC IPO price. So she has a very good track record.
Moser: Yea
Frankel: This is number 4. Coming to Payoneer, I am not a Payoneer customer, but they are specialized in international transfers.
Moser: Yes.
Frankel: They had a $ 44 billion flow through their network last year. They are very big. Your customers include companies like Walmart (NYSE: WMT), Airbnb (NASDAQ: ABNB), Amazon (NASDAQ: AMZN), Google (NASDAQ: GOOGL)(NASDAQ: GOOG). These companies use Payoneer to send money around the world. Payoneer, what a good app it would be if you were an advertiser and advertised somewhere outside your country. You would use something like Payoneer to send the money to its final destination. They were founded 15 years ago. The company is being valued at $ 3.3 billion in this business. More than a billion of that is new money. SPAC raised more than $ 800 million. There is a private investment of $ 300 million coming along with this, so this company will have good money to work to grow. This is really something I like about the SPAC model because it gives these companies a lot of cash revenue.
Moser: Yes.
Frankel: This is more than what Payoneer would probably achieve through a traditional IPO process.
Moser: Right.
Frankel: Normally, you don’t increase your share count by 50% on an IPO to raise capital, but that’s what they are doing here. They are valued at $ 3.3 billion and $ 1.1 billion is new money, so it’s a lot of ammunition to grow. Payoneer’s mission is to democratize access to financial services, which at cross-border level is extremely necessary.
Moser: Yes.
Frankel: It is an interesting SPAC and I like that Payoneer’s management remains in place. But one of the good parts about SPAC combinations is that you can enjoy the experience of the other person or the other party in other connections, which Betsy Cohen has a ton of. I like this arrangement. I think it’s a lot of money for a company like Payoneer to grow and I’m curious to see what they will do with it in the years to come.