Network International receives strong investor interest for planned London IPO

The company, an affiliate of Emirates NBD, is seeking a listing on the main equities market in the UK capital

Ron Kalifa, Chairman, Network International. Courtesy Network International

Network international, one of the top payments processing firms in the Middle East and Africa, has received strong investors' interest for its planned share float in London despite macro headwinds and softer equity markets conditions.

"Response [for the IPO] has been very positive throughout the world. The CEO [of NI] has spent a lot of time with lots of investors … the market has received it very well, the appetite is high and I think this is going to go very well," NI's independent chairman Rohinton Khalifa told The National.

“It is a great outcome for the customers, a great outcome for the company and a great outcome for the potential investors as well,” added Mr Khalifa.

NI, an affiliate of the Dubai’s largest lender Emirates NBD, expects its 25 per cent share sale to go ahead successfully, after global payments giant Mastercard, agreed to invest $300 million (Dh1.1 billion) in its IPO as a cornerstone investor.

Mr Khalifa is unfazed by the ongoing uncertainty of Brexit, saying NI’s business doesn’t rely on the UK’s relationship to the EU and that Brexit is almost “an incidental activity” happening on the side.

“There are obviously macro-economic concerns … But the way the potential shareholders have reacted, I think we are pretty positive in terms of not just the story of the business but also the appetite to invest in it."

The company is engaged with institutional investors around the world, but does not expect the larger ones to further commit investments before the IPO, he noted.

“Typically many don’t come pre-IPO. But we are fully confident, having Mastercard [on board] … will enable others to see the business positively,” Mr Khalifa said. “I think other investors will come at the IPO [stage] as opposed to pre-IPO. There’s nothing in the offing [in terms of cornerstone investors].”

Mastercard on Tuesday agreed to commit $300m in NI.

Both companies have also agreed to enter into a partnership and will retain and offer their respective independent solutions. NI will fully retain its “scheme agnostic strategy”, they said in a March 26 joint statement.

Mastercard’s investment in NI will be based on the same terms as institutional investors participating in the IPO, subject to a 9.99 per cent ownership limitation, a 24-month lock-up period and a 36-month standstill not to acquire additional shares without NI board approval, they added.

“It is an aligned interest between Mastercard and NI to drive the growth [of the payments business] in Africa and the Middle East,” Mr Khalifa said. “Mastercard is a huge organisation, the largest player in the payments ecosystem with a market cap of $200bn plus. Them coming into NI’s shareholders’ register is a very strong endorsement for NI and the region.”

The existing shareholders of Dubai-headquartered NI will sell down their stakes in the planned public offer, the company said earlier this month. It is 49 per cent held by private equity company Warburg Pincus and General Atlantic, and majority held by Emirates NBD, according to Bloomberg, which previously reported that it could be valued at about $3bn.

The company is seeking listing on the main equities market in London and expects that “it would be eligible for inclusion in FTSE UK indexes”, it said at the time.

The company, which plans to use the proceeds of the deal to pursue organic growth, remains focused on its core underpenetrated market of Africa and the Middle East, where about 20 per cent of the adult population holds a debit card while only 3 per cent hold credit cards. NI has no plans to expand to other geographies after its listing, Mr Khalifa said.

“In terms of what’s next. I think [the aim is to] get the IPO done. Let’s make sure we stay focused on customers and continue to grow in this region.

“The reality is that the opportunity within the home market is sizeable enough for now," he said. "There are no plans to enter other markets as there is an addressable market of about $6.2bn just within our home market, so that’s plenty to do.”