Embedded banking platform Railsr and payments provider Equals Group are set to combine forces in a £283 million merger, marking a significant move in the financial services sector.
Merger Details
The acquisition will occur through a newly-incorporated entity called BidCo, owned by a consortium of Railsr shareholders and private equity firms TowerBrook Funds and JC Flowers Funds. BidCo will pay Equals shareholders 140 pence per share, including 135 pence in cash and a five-pence special dividend, representing a 37% premium on Equals’ 31 October 2023 closing price.
A Journey to Stability and Growth
Railsr has been on a path of recovery since its fire sale last year. After narrowly avoiding collapse through a rescue deal, the company underwent administration under its new name, Embedded Finance, and secured £24 million in financing from investors like D Squared Capital and Moneta Venture Capital.
In March 2024, Railsr approached Equals Group for a merger, after Equals had initiated a strategic review of its options. Despite delays, the final agreement is now set to close in Q2 2025, bringing an end to months of negotiations.
Strategic Rationale
The merger combines Railsr’s expertise in embedded banking solutions with Equals‘ strengths in foreign exchange and payment services, aiming to create a formidable player in a fragmented market.
The consortium backing the deal believes this partnership will “accelerate the right-to-win” of both businesses by leveraging their combined capabilities to better serve customers.
Industry Implications
Former Chancellor of the Exchequer and current Railsr chairman, Philip Hammond, highlighted the strategic importance of the merger, stating:
“Today’s announcement represents a major strategic step for Railsr at a pivotal moment in the development of the embedded finance market.
“We are creating a significant new player. At a time when there is much fragmentation in the market, we will be well placed to provide an enhanced service to our customers.”
The deal positions the newly-merged entity to address the growing demand for streamlined embedded finance and payment solutions, consolidating resources to tackle market challenges.