Sinqia Acquisition: Key Details, Impact, and What Comes Next

EVERTEC's acquisition of Sinqia marks a significant milestone in the fintech industry. By integrating Sinqia's robust software solutions for financial institutions in Brazil, EVERTEC aims to enhance its market presence in Latin America. This strategic move not only diversifies EVERTEC's geographic footprint but also expands its product offerings, positioning the company as a leading fintech player in the region.

What Is Sinqia?

Founded in 1996, Sinqia provides comprehensive technology solutions for the financial market. Its core products include platforms for financial institutions, fintechs, asset management, pension management, and consortium management. Sinqia stands out for its emphasis on innovation and digital transformation, consistently ranking among the top 100 global technology companies for the financial market since 2017. Additionally, it is recognized as one of the fastest-growing companies in Brazil, underscoring its robust and reliable technology.

Who Acquired Sinqia?

Evertec is a prominent player in the financial technology sector, offering a comprehensive suite of services such as payment processing, risk management, and business solutions. Their key products include payment acceptance solutions, managed IT services, and ATM management. Evertec's influence extends across Latin America and the Caribbean, bolstered by multiple certifications and awards from industry leaders like Mastercard and Visa. Their commitment to innovation and technological advancement positions them as a leader in the fintech industry.

When Was Sinqia Acquired?

EVERTEC completed its acquisition of Sinqia on November 1, 2023. This strategic move aligns with the broader industry trend of fintech companies expanding their technological capabilities and market reach through acquisitions. The timing is significant as it follows Evertec's recent strategic milestones and reflects the growing importance of software solutions in the financial sector, particularly in emerging markets like Brazil. This acquisition positions EVERTEC to capitalize on the increasing demand for digital financial services in Latin America.

Why Was Sinqia Acquired?

• Market Expansion: The acquisition of Sinqia provides Evertec with a significant presence in Brazil, a key market in Latin America. This move aligns with Evertec's strategic objective of becoming a leading fintech company in the LATAM region, increasing its revenues in Latin America from 20% to 37% of its overall business.
• Technology Integration: The acquisition allows Evertec to integrate Sinqia's software solutions into its existing technology offerings. This integration is expected to create a comprehensive value proposition for clients, combining Evertec’s digital payments engine with Sinqia’s banking and financial software platform.
• Competitive Advantage: By acquiring Sinqia, Evertec aims to build a full-service technology company that can offer a comprehensive suite of products and services to its clients. This strategic move leverages Sinqia’s strong market position and recurring revenue model, along with Evertec’s expertise in payment solutions, to create a powerful competitive advantage in the region.

Acquisition Terms

• Acquisition Price: The acquisition price is R$27.19 per share, with an additional daily "ticking fee" of up to R$1.00 per share, valuing Sinqia’s equity at R$2,326 million (USD$485 million) and its enterprise value at R$2,835 million (USD$591 million).
• Payment Method: The consideration will be 90% cash and 10% Evertec shares. Evertec also secured debt financing commitments amounting to $1.2 billion to facilitate the acquisition.
• Key Conditions or Agreements:
  • The transaction has been unanimously approved by the boards of directors of both Evertec and Sinqia.
  • The transaction is subject to Sinqia stockholder approval of a simple majority (greater than 50%).
  • Evertec has entered into an agreement with shareholders representing approximately 40% of Sinqia’s outstanding shares to vote in favor of the transaction.
  • The transaction is expected to be completed during the fourth quarter of 2023, subject to satisfaction of customary closing conditions and approvals.
  • Evertec shareholder approval is not required and is not a condition to closing the proposed transaction.

Impact on Sinqia

The acquisition of Sinqia by Evertec is set to bring significant changes to the company's operations and management. Evertec plans to integrate Sinqia into its existing operations, creating a full-service technology company. This integration will likely involve streamlining processes and aligning management strategies to ensure a seamless transition. The boards of directors of both companies have unanimously approved the acquisition, indicating strong support for the strategic move. Additionally, Evertec has secured substantial debt financing to facilitate the acquisition, underscoring its commitment to this expansion.

In terms of product offerings and services, the acquisition is expected to enhance the combined entity's capabilities significantly. Sinqia's robust software solutions will complement Evertec's payment offerings, creating a comprehensive value proposition for clients. This synergy will provide Sinqia customers with access to Evertec’s advanced payment solutions, while Evertec's clients will benefit from Sinqia’s innovative financial software. Employee reactions have been positive, with Sinqia's CEO expressing excitement about the alignment of strategies and the opportunities for team members. Although specific customer reactions are not detailed, the enhanced service offerings are anticipated to improve customer satisfaction.

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