By Steve Gelsi
The founder of fintech company Black Banx is waiting for an IPO, while Bank of America CEO Brian Moynihan speaks of a “tremendous” deal pipeline
An earlier version of this report incorrectly identified Black Banx in the headline. It has been corrected.
The chief executive of Black Banx Group Holdings Ltd., a digital banking and cryptocurrency specialist with third-quarter revenue of $1.5 billion, says the company is planning an initial public offering of company shares, but adds that the timing of that not yet ripe now.
Michael Gastauer, who founded Black Banx in 2017 and built it to more than 5,100 employees and 33 million customers worldwide, said he would not look at a possible listing for now.
“We plan to go public as soon as market conditions change and become favorable enough for us,” Gastauer said in an email to MarketWatch.
The IPO market currently remains largely closed after major IPOs by Birkenstock Holding (BIRK), Instacart (CART) and Arm Holdings (ARM) failed, putting a damper on larger deals from Wall Street banks as underwriters.
However, as the S&P 500 SPX has shown some strength in recent sessions and there is talk of possible rate cuts in the future, Bank of America Corp. Chief Executive Officer Brian Moynihan said. (BAC) this week that he sees a “tremendous pipeline” of investment-banking deals.
Moynihan said investment banking activity related to initial public offerings and merger deals could pick up steam as more stability returns to the market.
Some bankers also say their outlook for 2024 is brighter than a year ago, as Wall Street plans for a possible soft landing for the economy in the next 12 months.
Meanwhile, Black Banx is currently well capitalized and does not need to raise additional capital, but still plans to eventually go public on the New York Stock Exchange, along with several investment banks.
“We fund our growth by reinvesting our profits back into the company, which could result in a slower growth rate but is a less risky way to grow a business,” Gastauer said.
Black Banx raised a $250 million late-stage Series C venture financing round in 2018 led by Gastauer Family Office, a single-tenant private wealth management firm founded by Gastauer.
Through the end of 2020 and the first half of 2021, larger private companies in the financial technology space achieved valuations of more than 24 times their annual revenue. By the third quarter of 2023, this number had fallen sharply to twice sales, said Gastauer.
For its part, Black Banx continues to participate in the global cross-border payments market, which has a compound annual growth rate of 7.5% and is expected to be $290 trillion by 2030.
“In addition to organic growth factors, we are quite strong in gaining further market share in regions that other fintechs are not yet targeting,” said Gastauer. “We examine [mergers and acquisitions] Opportunities and interviews with different candidates. Our main focus is on acquiring financial institutions in North America or Europe.”
Looking ahead to an IPO, Gastauer said he would like to see fintech valuations continue to recover from the trough after the banner year of 2021.
Brazil-based Nu Holdings Ltd. (Nubank) (NU), a rival digital bank to Black Banx, went public in December 2021 at a price of $9 per share and a market valuation of $41.5 billion. The stock fell to $3.60 per share last year and has since recovered to about $8.40 per share, with a market cap of $39 billion.
That puts Nu Holdings’ current valuation at nearly six times its forecast 2023 revenue of $6.74 billion, according to FactSet consensus estimates.
This is well below the 24x revenue multiple that fintechs achieved at the top of the market in 2021.
But for Black Banx, the trend at least appears to be moving in the right direction for a possible IPO at a higher valuation than it would have achieved in 2022 or 2023.
“Once the market reaches a stable valuation of over 10x, IPOs will begin on a much larger scale,” Gastauer said. “We may not see multiples as high as in 2021. We wouldn’t wait too long either and hope to get back to those levels.”
Also read: Birkenstock receives mostly positive reviews after IPO, but is still below its issue price
And: Brian Moynihan, head of Bank of America, reiterates the environmental goals and says it is what customers and the private sector want
-Steve Gelsi
This content was created by MarketWatch, operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
09/23/11 1511ET
Copyright (c) 2023 Dow Jones & Company, Inc.
Comments are closed.