Canada’s Brookfield acquires Network International for $2.8bn

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Brookfield Asset Management has agreed to acquire Dubai’s Network International Holdings in a deal valued around $2.8bn (GBP2.2bn), as the Canadian investment firm seeks to bolster its presence in the Middle East region’s payments sector.

The investment firm reached a deal to pay 400 pence per share in cash, which represents a premium of about 64 per cent to Network’s closing price on April 12 – the last business day before the start of the offer period.

The deal implies an enterprise value multiple of approximately 15.7 times Network’s EBITDA for the financial year ended December 31, 2022.

“The boards of Bidco and Network are pleased to announce that they have reached an agreement on the terms of a recommended cash acquisition pursuant to which Bidco shall acquire the entire issued and to be issued share capital of Network,” Brookfield said in a bourse filing.

Brookfield said the deal would be financed by a combination of equity investment, as part of which Brookfield Business Partners expects to invest up to about $150m. The balance of the equity investment will be funded from Brookfield institutional partners, in addition to equity funding from First Abu Dhabi Bank (FAB), subsidiaries of Mubadala Investment Company, ADQ Developmental Holding and Hana Investment Company.

Network’s directors were advised by PJT Partners, Citigroup and JPMorgan Chase on the deal while Brookfield was advised by Morgan Stanley.

Brookfield said it believes that Network is a highly attractive business owing to the payments giant’s extensive presence in the Middle East and Africa payments space and the company’s diversified customer base, which includes more than 150,000 merchants and 200 financial institutions.

Brookfield bolsters Middle East presence

Meanwhile, the Network deal follows Brookfield’s acquisition of a 60 per cent stake in Magnati, the payments business of FAB, in February 2022 in a deal worth $1.15bn (Dhs4.2bn). Brookfield said it sees a strategic and industrial logic in pursuing a potential merger of Network and Magnati.

“This combination would potentially create a key platform in the attractive Middle East payments space at scale, best positioned to provide a full suite of offerings, further strengthen unit economics and deliver significant synergy opportunities, while creating avenues of sustainable growth,” the investment said in a statement.

Network operates through two business divisions – the merchant services segment which provides payment gateways for online merchants and the outsourced payment services division – where the majority of the revenue is delivered through issuer processing. The company was listed on the London Stock Exchange in 2019.

The changing customer behaviours and reimagined customer experiences – marked by an increasing desire for frictionless, more seamless, and intuitive value-added banking experiences – are driving incumbents to develop open, collaborative financial ecosystems.

The payments sector in the Middle East is benefiting from the ongoing shift towards subscription-based billing—a boon for the region’s payments-as-a-service and software-as-a-service solution providers.

Read: Emirates NBD, Network International launch Emirates NBD Pay