Papaya Global Buys Azimo for $150-200M to Expand Payroll to More Markets – TechCrunch

Six months after raising $250 million, Papaya Global makes a major acquisition to expand its cloud-based HR and payroll platform globally on the heels of the great rise in remote work. Israeli startup acquires Azimo – Facebook’s London-based money transfer company once tried to buy spearhead its own referral efforts — a deal that will see Papaya Global expand into more markets and launch more services like instant payroll.

Terms of the acquisition aren’t being officially announced, but a source close to the company tells me the deal cost between $150 million and $200 million, a number others seem to have reported as well. Papaya will acquire all of Azimo’s business, including all employees, upon closing of the transaction, the company said.

In some context, Papaya Global — backed by the likes of Insight Partners and Tiger Global — was valued at $3.7 billion in its latest funding round in September 2021, after growing 300% in revenue every year for the past three years.

Azimo, meanwhile, has been backed by investors like Rakuten and Greycroft and competes with companies like Wise (FKA TransferWise). Both companies were among a shortlist that Facebook tapped into a few years ago when it began considering a switch to money transfer services (a service it now offers).

The deal will help Papaya Global on two levels.

First, it will help the company expand its geographic footprint: Azimo currently has payments licenses in the UK, Netherlands, Canada, Australia and Hong Kong and operates a payments network in over 160 countries, while Papaya Global (not until with the other fintech called Papaya be confused) operated services in 140 countries prior to this deal.

Second, it will help Papaya Global expand the services it offers. Not only does this include faster (instant) paycheck payment, but potentially a much wider choice of remittance services for people who work in one country but have family or other people who want to pay them in another country. In the past, these people may have used other services such as Wise (or Azimo for that matter) to process these payments; now Papaya Global can keep them on their own network (thus collecting the commissions and FX fees on those transactions).

“Papaya’s customers will benefit tremendously from our years of experience building payment technologies and operating as a regulated payments company,” Azimo CEO Richard Ambrose said in a statement.

It also plays a role in a strategy Papaya Global has been pursuing for some time to provide an all-in-one, end-to-end service to its clients — which don’t just include employers sourcing employees in other markets and finally hire (be it). freelance or full-time or something in between), but increasingly services for those employees themselves.

“Payroll made easy, regardless of geography, sets us apart from other technology providers, and this acquisition will enable companies to make instant payments to their global teams,” said Eynat Guez, CEO and co-founder of Papaya Global, in a statement. “Azimo’s global digital payments network, multiple payments licenses and deep fintech expertise will also enable us to build new payroll-related services for our business customers and their employees.”

For Azimo, the company told us in 2019 that it was profitable, and that was the last year it also raised equity. (A €20 million/$22 million cash injection from the European Investment Bank in 2020 came in the form of debt.) But that also meant the company may not have grown as much as it could have in competition with Wise It would have taken a different funding path, particularly in the last few pandemic years, which have seen strong demand in the remittance market. PitchBook estimates its 2019 valuation was a modest $136 million.

Additionally, there is a long-term trend of consolidation in the market – one that will continue for years to come given how fragmented the remittance market is today and the low margins for those players that are not scaling. Tying his star to Papaya Global and a broader service offering that includes HR and payroll is a way to strengthen the business in ways that might have been more challenging for Azimo alone.

“By combining Azimo’s assets and expertise with an emerging global leader in remote working enablement like Papaya, they will be able to deliver even more value to their business customers, particularly those who increasingly have paid and managed remote workers,” said the Chairman and Founder by Azimo, Michael Kent, in a statement.

One of the reasons the companies aren’t publicly discussing the sale price is that the deal isn’t fully finalized: it requires regulatory approvals in their respective markets, and so they will continue to operate independently until those are achieved.

Leave a Reply

Your email address will not be published.