Spenda Ltd (ASX:SPX, OTC:CROTF) has accelerated the growth of its all-scrip transactions by signing a binding term sheet to acquire 100% of the issued capital of Limepay for up to $8 million.
Limepay is a business-to-business (B2B) software-as-a-service (SaaS) company providing embedded finance and card-not-present payments as a service provider.
The acquisition will take place over four tranches, with the last three contingent on specific performance milestones and if all are achieved, Spenda expects a minimum growth in annual recurring revenue of $7.2 million.
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Increasing wallet share per customer
“This is a high-value acquisition for Spenda that brings product capability, exceptional people, great customers and many opportunities to work together to drive revenue growth,” Spenda managing director Adrian Floate said.
“The combined entity will have an expanded product suite that will enhance its competitive positioning in market and enable access to new customers and market verticals.
“From an operational perspective, the addition of a high-quality team of banking software engineers will accelerate our current project pipeline and improve our operational efficiency.
“We have complementary product roadmaps, and the ability to scale payment flows across the combined entity which we expect will increase our wallet share per customer.”
Limepay generated $2.8 million in unaudited revenue and $1.4 million in unaudited gross profit in the 2024 financial year, with potential for growth in the form of a strong pipeline of new customer acquisitions.
Spenda says Limepay’s capabilities align with SPX’s core strategy, enhancing the speed it can execute its existing customer contracts, including with Carpet Court and Capricorn while also scaling payment flows in general.
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Building a leading payments company
“We are extremely excited about the opportunity to create a leader in the embedded finance space by integrating with Spenda and its management team led by Adrian,” Limepay founder and director Tim Dwyer said.
“I believe it will be a great cultural fit for both our organisations and we’re excited to be part of Spenda’s next chapter, I believe the transaction will position us to execute significant business opportunities and create a leading payments company for enterprise customers.”
The acquisition tranches are structured as follows:
Tranche 1 - Spenda will pay $2.48 million through the issue of 204.9 million shares at an issue price of $0.0121 upon completion, expected in September.
Tranche 2 - Spenda will pay up to $720,000 through the issue of up to 59.5 million Spenda shares at an issue price of $0.0121, upon Limepay’s receiving its FY24 R&D refund of circa $720,000 which is expected before the end of 2024;
Tranche 3 - Spenda will pay $2.4 million, through the issue of Spenda shares at an issue price of the greater of $0.0175 or a 10% discount to the 90-day volume weighted average price (VWAP) for Spenda shares, upon Limepay achieving Annualised Rolling 3-month average revenue (ARR) of at least $4.8 million for three consecutive months; and
Tranche 4 - Spenda will pay $2.4 million, through the issue of Spenda shares at an issue price of the greater of $0.0225 or a 10% discount to the 90-day VWAP, upon Limepay achieving ARR of at least $7.2 million for three consecutive months.
Spenda expects to complete the acquisition by the end of the third quarter of this year.