Alpha Group Intl PLC - Acquisition of Cobase

12 September 2023

Alpha Group International plc

("Alpha" or the "Group")

Acquisition of Cobase

Leading Multibank Platform joins Alpha Group

Alpha Group International plc today announces that it has entered into a conditional agreement, pending approval by the Dutch Central Bank, to acquire circa 85% of Financial Transaction Services B.V., trading as "Cobase", a leading multibank connectivity platform. The initial consideration for the acquisition is €9.4m (£8.0m) in cash, with the remaining stake to be acquired via a performance-based earn-out between 2025 and 2028.

About Cobase

Founded in 2017, Cobase is an innovative, cloud-based provider of bank connectivity technology that enables corporates to manage their banking relationships, accounts, and transaction activity via one single interface. In doing so, the company unlocks significant operational and financial efficiencies, especially for international businesses with multiple banking counterparties across the world.

Without Cobase, companies have to manage multiple platforms and integrations across an array of banks, significantly reducing the efficiency and visibility with which they can manage their payments, cash management and treasury functions. The more banks and accounts a company has, the more challenging this becomes.

Companies can utilise Cobase's solution either directly through its platform or via its off-the-shelf ERP connections, with widely used solutions such as Oracle Netsuite, Microsoft Dynamics and SAP S4/HANA. The ease and simplicity with which this connectivity can be offered is a key differentiator in a marketplace where it is typically only achieved through enterprise-grade Treasury Management Systems ("TMSs"). Such systems require expensive and resource-intensive manual integrations with separate banking and payment providers, as well as separate memberships with networks such as SWIFT. As a result, research of Alpha's existing client base shows that less than 10% are using a traditional TMS. Cobase however enables companies to leapfrog these barriers through its unique approach of being a software business, whilst also holding its own regulatory statuses and SWIFT membership. Alongside its bank connectivity, key features include a Central Payments Hub as well as a Cash Management and Treasury Management module. This makes Cobase a flexible and accessible option for corporates that would benefit from many of the features of a TMS, but have been put off by the time, costs and expertise traditionally required to implement and maintain one.

The company was founded in 2017 by Jorge Schafraad, with initial funding from ING Ventures after the concept was successfully proven in an ING Accelerator program. Currently the company employs a team of c. 30 and is headquartered in Amsterdam, The Netherlands. The platform has benefitted from significant further investment from ING Ventures, Credit Agricole Corporate and Investment Bank, Nordea and Cobase's technology partner Redmath BV, and a visionary management team, creating an innovative multibank platform that has over 500 bank connections across more than 80 countries. At the time of writing its current revenue is solely from SaaS subscription fees, generating recurring revenues of circa £2m per annum. It has a client base of over 100 corporate groups across the world, reflecting over 50% growth in the last 12 months.

Clients can either utilise Cobase through the company's own portal or mobile app, or from within their own ERP system by sending instructions via host2host or API connectivity.

Strategic Rationale

Alpha and Cobase's offerings are highly complementary with one another, and the Board believes there are opportunities to amplify one another's growth by leveraging and sharing each other's unique capabilities and experience. Indeed, analysis has shown that 80% of Cobase's existing client base falls within Alpha's own target market, highlighting the strong potential for mutual value adds.

Going forward, Cobase will retain its team and continue to operate under its own brand and management whilst its proprietary technology will help to accelerate Alpha's digital proposition and enable us to become increasingly more integrated with our clients by providing a more holistic treasury service around our core FX risk management proposition. This will, in turn, enable Alpha to provide more value to existing clients, increase wallet share and retention. Additionally, it will naturally allow Alpha to attract new clients for whom bank connectivity is an initial purchasing driver, as is evidenced by the 100 corporates who are already using Cobase. At the same time, we see an exciting opportunity for the Cobase team to leverage the scale and experience of Alpha's global sales team, as well as the cross-selling opportunities with Alpha's own client base.

Speaking on the acquisition, Morgan Tillbrook, CEO and founder of Alpha Group, said:

"Whilst we have had plenty of opportunities to make acquisitions and external investments, we have very high expectations for ourselves and our investors. The fact that after more than six years as a public company and after considering numerous acquisition opportunities, this is our first investment of this kind is ultimately a testament to the company that Cobase have built, and the strength of the alignment the company has with our business. I am delighted to welcome Jorge and his team to Alpha and have been incredibly impressed by the technology they have built. I am excited by the opportunity to work together to accelerate the growth of both businesses and the strong mutual value it will bring to our client bases. Our strong cash generation has given us the opportunity to acquire this highly synergistic platform, and we will continue to analyse the market and review M&A opportunities within our wider capital allocation strategy."

Jorge Schafraad, CEO and founder of Cobase, said:

"We are delighted to join the Alpha Group as they are a client-driven and innovative company in a field adjacent and closely aligned to ours. They have clearly achieved a leading position in their market and are as such an enviable partner, and we are convinced that this will unlock exciting new opportunities for our customers, partners and team going forward. All services we currently offer will remain in place for our existing and new clients and we look forward to introducing additional features, products and services in the near future."

Enquiries:

Notes to editors

Alpha is a high-tech, high-touch provider of enhanced financial solutions dedicated to corporates and institutions operating internationally. Working with clients across 50+ countries, we blend intelligent human capabilities with new technologies to solve complex problems across three key areas: FX risk management, global accounts and mass payments.

Key to our success is our team - over 350 people based across seven global offices, brought together by a high-performance culture and a partnership structure that empowers them to act as owners of our business.

Despite being an established business listed on the London Stock Exchange, we remain relentlessly focused on maintaining the same level of operational agility and client focus we had when we first started in 2009. This dynamic, combined with the passion of our people, have enabled us to make a substantial and enduring difference to our clients, and deliver a growth story to match.