Thursday , May 23, 2019

Fresh off Its eBay Coup, Adyen Mulls What Could Be a Rewarding Second Act—Going Public

The Dutch payments provider Adyen stole headlines in February with its agreement to be the processor behind eBay Inc.’s ambitious new payments platform, and this week news emerged that it could be ready for yet another big move—an initial public offering.

The Amsterdam-based company, which maintains a U.S. headquarters in San Francisco, is considering a public listing that would take place on Amsterdam’s Euronext exchange in June and value the firm at between $7 billion and $11 billion, according to an account by Reuters, which cited sources familiar with the matter. As a 12-year-old private entity, Adyen carries a valuation of $2.3 billion, enough to rank it among a handful of privately held payments-related companies worth $1 billion or more. The list is headed by Adyen’s San Francisco neighbor, Stripe, which is worth $9.2 billion.

An Adyen spokesperson did not respond to requests for comment from Digital Transactions News. The Reuters report said the company would not comment.

As important as the eBay deal will be to Adyen, the company is no stranger to processing for big-name clients, including Airbnb, Netflix, Spotify, and Uber. Now, a leap into the spotlight of public ownership could bring new rewards, as well as challenges, experts tell Digital Transactions News.

“It will certainly generate publicity for Adyen, which is never a bad thing, and it will provide capital to invest in further growth,” says Rick Oglesby, proprietor of Mesa, Ariz.-based consultancy AZ Payments Group, in an email message. “The timing, shortly after winning the eBay deal, is good as well. A high-profile deal with a marquee client never hurts when you’re looking to make a name for yourself in the public markets.”

In fact, eBay’s patronage may serve to underscore what is already a remarkable growth story, some observers say, while accessing the public markets could bolster the company as the payments business comes to be dominated by mega-mergers and characterized by rapidly advancing technology.

For 2016, the last year for which numbers are available, Adyen reported it was profitable on $727 million in revenue. From 2013 through 2016, the company averaged annual increases in payments volume of 86% and in revenue of 99%, according to Eric Grover, who follows the company at Minden, Nev.-based consultancy Intrepid Ventures. “What’s not to like? Its clients are large and sophisticated,” he says by email.

Grover also figures Adyen’s major investors may be looking for a cash-out. Its lead investors through three funding rounds since 2011 have been Iconiq Capital, General Atlantic, and Index Ventures. “Investors like General Atlantic and the founders want a path to liquidity, which an IPO will give them,” Grover says. Meanwhile, with its position as a provider for major clients, steady growth, and an offering that includes scores of the world’s payment methods, Adyen presents “an eminently IPOable story,” he adds.

Others agree the IPO will allow investors to cash out, but question the timing of the event for the company. “I am not sure why—or if—this is the right time for Adyen to go public, strategically speaking. They seem to be well funded,” says Ron van Wezel, an Amsterdam-based senior analyst for Aite Group, a Boston-based financial-services research firm, in an email.

One other advantage, albeit an intangible one, that Adyen may enjoy if it does pursue an IPO is that it is frank in describing itself, says Grover. “I like that management is pretty straightforward in telling the story, as opposed to a number of high-profile fintechs that seem to want to characterize themselves as anything but a payment processor,” he says.

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