Inside Railsr’s Equals acquisition: Key details of the embedded finance-focused deal
Nine months after first indicating its interest, embedded finance player Railsr has agreed an offer to buy B2B-focused Equals Group, in a consortium backed by key investment firms. We look into the details of the deal.
After first indicating its interest in March, restructured embedded finance player Railsr has, as of Wednesday, reached an agreement with B2B money transfers major Equals Group for an all-cash acquisition that values the company at around £283m ($361m).
The move sees Railsr acquiring the company as part of a newly formed consortium, which also includes investment management firm TowerBrook and private investment firm J.C. Flowers.
Terms of Railsr’s acquisition of Equals
The move is subject to agreement by Equals Group’s shareholders, but represents a favourable improvement on the company’s share price as a public company. Under the terms, shareholders will receive 140 pence per share, 135 of which is a cash consideration, while the remaining 5 pence is classed as a special dividend, which is set to be declared by Equals’ board of directors prior to completion of the acquisition.
Crucially, this is separate from dividends announced as part of the company’s interim financial statement in September.
The price is above almost any share price in Equals’ history as a publicly traded company, save for a short period in late 2018 when the share price reached 150 pence.
What Equals offers Railsbank
For Railsr, formerly Railsbank, Equals represents the opportunity to step up and add scale to its embedded finance solutions and market presence. Having been brought back from the brink of bankruptcy through an acquisition by a consortium led by D Squared Capital in March 2023, Railsr has seen significant investment focused on strengthening its position in the European market.
According to the announcement of the deal, it is thought that the acquisition of Equals can build this further to “potentially create one of the largest and most capable embedded finance platforms in Europe”.
While Railsr offers banking-as-a-service (BaaS) and cards-as-a-service (CaaS) solutions that include virtual cards, international transfers and FX, balance holding and open banking, Equals’ range of products, licences and technology stack are a key appeal.
In addition to B2B payments-led Equals Money, the group also includes enterprise-focused Equals Money Solutions; white label offering Equals Connect; high-net-worth individuals-focused FairFX; and UK SME-focused CardOneMoney.
Equals Group’s financial position
The Railsr consortium also highlighted Equals’ track record of growth and its corporate and personal client base as key strengths, which is reflected in the company’s latest results. In H1 2024, Equals saw revenue grow 33% YoY to £60m, while volume increased by 56% to £9.3bn. It also reported a 20% increase in operating profit and an adjusted EBITDA increase of 30% to £12.7m, for an adjusted EBITDA margin of 21%.
Over the past few years, Equals has also increasingly diversified its revenue towards large enterprise customers. The company’s Solutions revenue, which is contributed by its large enterprise customer base, has grown from 2% of revenue in H1 2021 to 41% in H2 2024.
Next steps in the acquisition process
While the acquisition is subject to a vote of approval by the Equals shareholders, it is expected to be completed by the end of Q2 2025, with the respective CEOs of both Equals and Railsr, Ian Strafford-Taylor and Philippe Morel, set to serve as co-CEOs of the resulting combined organisation.
“We are creating a significant new player,” said Lord Philip Hammond, Railsr’s Chairman and former UK Chancellor of the Exchequer. “Fintech continues to be a major catalyst for economic growth and this new group, one of the largest embedded finance companies in Europe, will be well placed to contribute.”
