Illimity and Fabrick, a platform that promotes new business models and banking services by fostering collaboration between financial institutions, corporate, and fintech institutions controlled by Banca Sella Holding, announced the signing of an agreement.
On the one hand, Illimity will enter the capital of Hype, the Italian market leader in the segment of innovative financial services provided by non-banking operators, which is currently entirely owned by Fabrick. On the other hand, Fabrick and Banca Sella enter the capital of Illimity. This is the first industrial consolidation operation in Italy in open banking.
The joint venture will be led by Antonio Valitutti, current CEO of Hype, while Carlo Panella, Head of Illimity’s Direct Bank Division, will take the position of Chairman. For the purposes of the operation, Illimity is assisted by financial advisor Lazard and Studio Carnelutti for legal assistance. Arma Partners and the firm Orrick, Herrington & Sutcliffe act as advisors for Banca Sella Holding and Fabrick.
Find out more about the new agreement between Illimity and Fabrick to buy 50% of Hype and read the most important business headlines with the born2invest mobile app.
The company Hype is currently integrated into Fabrick
Fabrick was founded in 2017 with the aim of fostering open banking, encouraging the meeting and collaboration between fintech companies, large companies and traditional operators in the financial world, providing them with technologies, skills and services. It is controlled by Banca Sella Holding, which holds 80% of the capital. The rest is instead distributed among the partner-entrepreneurs who have gradually joined the project by contributing all or part of their company’s capital to the platform, becoming part of Fabrick’s management and corporate structure. Since last May, the company has been a payment institution.
Hype is a startup accelerated by SellaLab and later integrated into the banking group, which developed an app that turns users’ smartphones into an e-money account that allows them to transfer money between individuals and make payments online and in physical stores, as well as planning savings and spending targets.
At the moment, Hype is integrated into Fabrick. Last March, Hype launched Hype Bitcoin, in collaboration with the Italian fintech company Conio. Since last June, Hype operates as Imel (Electronic Money Institute), so it can open and manage its customers’ accounts autonomously, giving them a specific Iban valid at European level.
The agreement provides for the incorporation of Illimity’s new open banking solutions developed in recent months into Hype, thus accelerating their development in terms of execution, volume growth, cross-selling and profitability. The objective of the industrial operation is to increase the ambitions of the project and the simultaneous acceleration of the growth of Hype, which already serves 1.3 million customers, in addition to accelerating Illimity’s development plans.
In detail, the agreement provides:
The purchase of 50% of Hype by Illimity, through the subscription by Illimity of a reserved capital increase in Hype for $35 million (€30 million), consistent with the financial requirements necessary to support the development foreseen in the Hype industrial plan;
The contribution by Illimity to Hype of some activities, resources and technologies related to the open banking project functional to Hype’s business plan;
The conferment by Fabrick in Illimity of Hype shares against newly issued Illimity shares equal to 7.5% of the capital for a value of approximately $52.6 million (€45 million);
The assignment to Fabrick of a right to receive additional newly issued Illimity shares (without share capital increase) for a further 2.5% of the capital subject to the achievement by Hype of certain profitability targets in 2023-2024 (earn-out).
Illimity will issue approximately 9.4 million new shares
As part of the agreements between the parties, the transaction provides for Banca Sella Holding to subscribe in cash on completion of the transaction a further increase in Illimity share capital for $19.3 million (€16.5 million), excluding pre-emption rights (equal to 2.5%), for a total participation of the Sella group on completion of the transaction of 10%. As a result of the transaction, Illimity will issue a total of up to approximately 9.4 million new shares, of which approximately 7.3 million upon completion of the transaction and a further 2.1 million by 2025, subject to the achievement of the aforementioned long-term Hype business plan objectives.
All this for a maximum total value of $91.1 million (€78 million), at the issue price of the new Illimity shares, which was negotiated at $9.74 (€8.34). This means that 100% of Hype has been valued at between $143.7 and $182.3 million (€123 and €156 million), depending on whether the earn-out is paid out or not. The transaction is expected to be completed by the end of 2020, subject to resolutions of the shareholders’ meetings of the parties involved and authorizations by the competent supervisory authorities.
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First published in Be Beez, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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