WorldRemit pays $500m for African startup, Sendwave, as COVID-19 revs up digital banking demand

Charles Abuede

As the global pandemic intensifies the demand for digital banking globally, WorldRemit, United Kingdom online money transfer company, has entered into an agreement to buy Sendwave, an Africa-focused, app-based remittance firm in a deal worth over $500 million, which is set to give a combined company value of more than $1.5 billion.

Breon Corcoran, WorldRemit chief executive officer said about the transaction: “What we saw immediately after lockdown orders is a real acceleration toward digital with the rate of new account activations more than doubling this year,” adding that the company is making a bet that the pandemic-fueled swing to digital banking will become permanent.

“This is a fast-growing part of the broader payments space and increasingly, our businesses will be viewed as more akin to Venmo or PayPal,” Corcoran said as he hinted that the firm would continue its search for more acquisitions although, no plans for initial public offerings are in the pipeline.

The company further revealed that Sendwave acquisition will help strengthen WorldRemit’s coverage of Africa, as the Y Combinator-backed startup allows customers in Europe and North America to send instant payments to friends and relatives in Eastern African countries and West African countries including Ghana, Nigeria, and Senegal.

However, “Sendwave, with the acquisition will continue to function as an independent business entity and retain its management, employees and key partners,” the companies said.

On the other hand, WorldRemit and Sendwave have improved their combined profits by more than 50 per cent to $280 million in the 12 months ending in June compared with a year earlier, as customers initiated transfers worth about $7.5 billion in transactions value, the companies said.

Global Payments decline

Meanwhile, the World Bank is anticipating a 20 per cent decrease in worldwide remittances this year as a result of the financial crisis coming from the pandemic. While the pandemic has pushed more individuals to bank carefully, they are sending less cash abroad.

In the same vein, the multilateral lender projects that diminishing wages and business opportunities for migrant workers who regularly send cashback to loved ones are anticipated to haul down remittances to low-middle income nations to $445 billion this year. The figure, however, is expected to recoup to $470 billion one year from now.