Network International taking giant strides

Dubai: Network International has come a long way in two decades from an obscure back-office handler of one bank to the leading payment solutions provider in the Middle East and Africa (MEA) with presence across 71 countries, servicing over 200 banks as clients and more than 70,000 merchants.

Although the company had been nurturing ambitions of expanding beyond the Middle East region for the past several years, the real breakthrough came this year with the acquisition of Emerging Markets Payments Holdings Limited (EMP) from private equity investor, Actis.

EMP has an extensive footprint in the Middle East and Africa (MEA), serving more than 35,000 retailers and 130 banks and processing over nine million accounts — all run along four key business lines that including bank processing, merchant acquiring, retailer processing and ATM services.

Ahead of this crucial deal, the ownership of Network itself underwent a change with global private equity firms Warburg Pincus and General Atlantic taking over 49 per cent stake held by Dubai-based private equity firm Abraaj Capital.

The entry of Warburg Pincus and General Atlantic as shareholders seems to have given wings to the global ambitions of Network.

“They are very bullish about the company and the region. They see great potential in the Middle East and they also see Africa as new area that has huge opportunities. While as private equity players they are looking at maximising shareholder value, their involvement comes with a commitment to bring best in class and best in the world products to the region,” said Bhairav Trivedi, CEO of Network International.

Clearly, the global deal making capabilities these two private equity majors are helping Network in its global pursuit.

“We were looking at expansion into Africa [and] that is when this opportunity to acquire EMP came along. We started looking at this asset from some time middle of last year. Around the same time GA and Warburg Pincus also were looking at this asset. When we all got together it became a natural fit to get into this asset,” said Trivedi.

The company closed the transaction on May 12. EMP is a well-established player 40 African markets. Without this acquisition, it would have taken several years and server hundreds of millions of dollars investment to build access to these markets.

Network has platforms that are targeted at large institutions and are highly sophisticated while EMP’s platforms are more geared to support small-to-medium-sized (SME) institutions. This gives the combined entity a wide range of options across the markets it caters to.

Tapping into these synergies will be the key to the success of this acquisition.

“For us the key thing is integration and achieving revenue synergy. We are very complementary in what we do,” he said.

Expansion plans

Network will continue to expand within its core markets across Africa and Middle East and will actively pursue acquisition opportunities elsewhere if it fits the overall strategy.

“Our strategy is to go into markets where we are likely to succeed. Clearly we have chosen [the] Middle East and Africa as our core markets. We have looked at Asia and most of Asia is very competitive. The advantage with Africa is that all transactions can be processed from one single hub because none of the individual markets are big enough to need a processing hub,” said Trivedi

Today Network International process transactions from 25 African countries and EMP processes about 45 African countries with some overlap. All of EMP’s transactions are processed out of Egypt and Network transactions are processed through Dubai. This is not possible with some of Asian countries because some of them require local presence. Similarly, that is one of the reasons that the company is yet to get into Saudi Arabia.

Europe is an extremely competitive and mature market and may not work for a new entrant like Network. That makes emerging markets the ideal target for future expansion.

“Starting out as a new player in any of these markets doesn’t look like a viable option, thus any future expansion into new markets could come through acquisitions,” said Trivedi.