SoftBank invests in Wirecard, fueling expansion amid processor's accounting scrutiny
With Wirecard's value tumbling since a Financial Times report two months ago alleging an accounting scandal in its Asian operations — and a followup Wednesday reporting that half of its revenue comes from "three opaque partner companies" — the German payments processor received a lift from a €900 million ($1 billion U.S.) investment from Japan's SoftBank.
Technology conglomerate SoftBank will make the investment by buying five-year bonds in Wirecard that can be converted into a 5.6% equity stake at a price of €130 a share.
"As global innovators, we focus heavily on expanding our networks and creating opportunities for companies with groundbreaking ideas," Wirecard CEO Markus Braun said in a Wednesday press release. "In SoftBank we have found a partner that shares both our passion for new technologies and drive to spearhead the latest innovations, all on a global scale."
As part of the deal, the pair have signed a memo of understanding for SoftBank to support Wirecard's efforts to expand into Japan and South Korea. Wirecard will also work with the Japanese firm to strengthen SoftBank's payments and financial services portfolio while the companies explore the digital lending market.
The investment, which comes a day before Wirecard is to present its annual results, sent the German firm's share price up more than 10% to above €136 in morning trading; share prices dipped lower to €131 over the course of the day — and reflect a steeper drop from the €160 share price prior to allegations in which a company executive was suspected of using forged and backdated contracts to complete transactions.
In its Wednesday article, The Financial Times cited the three partners responsible for half of Wirecard's revenue as Al Alam Solutions, a Dubai-based payments processor, a small company but the largest of the entities; PayEasy Solutions, a Phillipine payment group; and Singapore-based Senjo.
Earlier this year, Braun declared suspicions of accounting breaches at the firm between 2015 and 2018 as "resolved" after an investigation by Singapore-based firm Rajah & Tann.