The Strategic Path Of The Italian Fintech Giant

Nexi and Sia have agreed upon an all-share €15bn merger to create an Italian payment giant that can compete at European level. The Italian government played a crucial role in the deal through Cassa Depositi e Prestiti (CDP), the government’s unit to implement public policy mandates and it is nonetheless Nexi’s largest shareholder. Furthermore, this operation will increase barriers to entry in the Italian payment market and consolidate the highly fragmented digital and fintech market.

About Nexi

Nexi S.p.A. is an Italian bank that offers digital payment services and infrastructures for banks, firms, institutions, and public administration.

Nexi is a modern fintech firm with an unusual past. It was indeed founded in 1939 under the name of Istituto Centrale delle Banche Popolari Italiane (ICBPI) from six Italian banks. In the following decades anyway, it assumed a central role in the Italian scenario over the electronic shift of interbank transfer of funds and data, and consequently to the birth of modern interbank payment systems.

In 2015 the bank was acquired by a consortium composed  of Bain Capital, Advent International and Clessidra SGR. In 2019, Nexi went for an IPO where it earned an initial market capitalization of €5.7bn as it raised €2.01bn of shares it was the largest IPO by financing raised in Europe in 2019 (according to Statista)

Nexi manages 6.1 bn of transactions with about €463 bn of value every year. In addition, it has 41.6M cards, 900.000 merchant, 13.100 ATMs, and 469.000 corporate banking workstations.

The COVID-19 pandemic had some but not disruptive effects on Nexi’s financial statements as we can appreciate in the graph:

Nexi’s revenues are split with the following percentages: Merchant Services & Solutions 51%, Cards and Digital Payments 38%, Digital Banking Solutions 11%.

About SIA

SIA S.p.A. is the European leader in the design, creation and management of technology infrastructures and services for different players (Financial Institutions, Central Banks, Corporates and the Public Sector among the others).

The company was founded in 1977 as Società Interbancaria per l’Automazione by Banca d’Italia, ABI and a pool of Italian banks. SIA Group provides its services operating in different branches and subsidiaries located in more than 50 countries.

The Company’s business areas are focused on: payment systems – clearing and settlement of gross payments, management of interbank collections and payments, contactless payments and multichannel payments; payment cards – issuing and acquiring of debit, credit and prepaid cards for all domestic and international circuits; services to financial markets – trading and post trading technology platforms for financial markets; management of databases –  interbank register of bad cheques and payment cards and ATM procedural register and monitoring service; network – connectivity and data transport services to banks and financial firms. The major shareholders of SIA and their respective equity stakes are: FSIA Investment (57.42%), Cassa Depositi e Prestiti – CDP Equity (25.70%), Banco BPM (5.33%), Mediolanum (2.85%) e Deutsche Bank (2.58%). 

During the 2019 FY, the SIA Group processed overall the clearing of €16.1 billion card transactions through 84.4 million cards managed. On the financial markets, the number of trading and post-trading transactions rose to €130 billion, with an average weekly transaction of €2.5 billion.

In 2019, saw a rise in SIA’s revenues of €728 million, with a growth of €114 million (+15.65%). EBITDA is down at €222 million from €276 million in 2018 (-19.56%) as the Net profit is €76 million, down by €19 million (-20%) compared to the previous financial year. 

From a geographical perspective, the revenues are primarily from the Italian market accounting for 68% but with an increasing market position in Western and Eastern Europe accounting respectively 15% and 17%.

Reasons for the merger

According to McKinsey, today’s new economics are expecting to introduce a new trend of consolidation especially in the fintech market. In order to fill monetization deficiencies in business models, fintech firms could start to merge to exploit synergies. “A fintech with a large transactional customer base but no lending capability, for instance, might acquire credit expertise and the relevant technology in order to offer a broader customer value proposition”.

As we can appreciate from the graph here, Nexi and Sia are complementary for Technological Platform (Sia) and Operations plus Products/Solutions (Nexi). In particular:

  • Product and digital solutions factory, merchant service focused
  • Front-end driven digital innovation
  • International card rails leader
  • Value oriented partnerships with over 150 Italian banks
  • Italian home market leader
  • Platform and processing factory
  • Back-end technology platform innovation
  • Account-to-account and national card rails leader
  • Reference technology partner for Banks, Central Institutions, Corporates and Public Administration
  • Established Italian player with growing European presence

Thanks to the combination of two highly complementary models, the new company, will be able to compete with a wide range of best-in-class solutions entirely developed in-house.

It will become strongly competitive in terms of digital innovation, technology and efficiency, essential characteristics in order to assist the entire banking and digital payments system in Italy and in Europe.

In fact, thanks to this merger, the service provided will touch the entire ecosystem: from national to international banking institutions, from large merchants to small retailers as well as Public Administration. It will become a key technological partner for various banks and financial institutions through its partnerships with the principal players in the sector e.g. Bancomat S.p.A., CBI S.c.p.A as well as Borsa Italiana, to which in particular it provides the trading and post-trading services.

In terms of numbers and figures, the new group will be leader in:

  • Payment Company by Acquiring Transaction Volumes, # of Merchants, and # of Cards in Continental Europe
  • Processor of Cross-border Payments
  • Acquirer and Card Processor in Italy
  • Card Processor in Central & South-Eastern Europe

The total number of merchants will arrive at about 2 million, with 120 millions of cards, and an overall number of processed annual transactions equal to more than 21 billion.

 As we can imagine, one of the main reasons for the merger is therefore to further consolidate the position in the Italian market: a combined 70% market share will make Italy less attractive to other payment groups, which are racing to consolidate. This will necessarily increase barriers to entry in the Italian payment market.

 Given the strategic combination, the new company will be better positioned to capture multiple growth avenues, organic and inorganic. The growth through M&A will be supported by an increased cash generation, in fact, the new group is expected to generate operating cash flow for about €0.8bn (calculated as EBITDA net of ordinary capex and change in working capital).

 Moreover, CDP interest in the merger reflects the Italian government’s effort to promote digital payments in the Italian market still dominated by cash transactions. New laws and regulations will try to promote digital payments in the Italian scenario with Nexi in pole position to help and promote the relative benefits.

Deal Structure

All-share transaction, with 1.5761 newly issued Nexi shares for each SIA existing share. Cassa Depositi e Prestiti as long-term institutional shareholder through CDP Equity and Fsia, committed to support the New Group’s strategic growth in Europe.

Nexi shareholders will maintain a 70% holding in the combined group, in what is in effect a takeover. Sia’s investors will hold the remainder, with 25 % shares in the hands of CDP.

The deal values Sia’s equity at €4.5bn including €700m of net debt, corresponding to a 13.6x of 2019 EV/EBITDA multiple including run-rate synergies which is ~€4.6bn Equity Value of SIA implied at Nexi current share price. Moreover, this valuation of 19 times next year’s expected EBITDA is in line with where highly valued Nexi shares currently trade.

As concerning the timeline: The Signing of Merger Agreement is expected by December 2020, subject to confirmatory due diligence Closing expected by summer 2021, subject to customary closing conditions including regulatory bodies, Antitrust authorities and shareholders’ approvals.


Nexi has been advised by BofA Securities, HSBC Bank, and Mediobanca – Banca di Credito Finanziario S.p.A. as financial advisors, from Legance – Avvocati Associati for the legal aspects nonetheless from PWC for the two financial and accounting due diligences and from KPMG for the fiscal side. SIA has been assisted by J.P. Morgan as Sole Financial Advisor and supported by Rothschild for specific activities in the transaction context, from Gianni, Origoni, Grippo, Cappelli & Partners for the legal aspects.

Authors: Marco Milan, Tommaso Recanatini



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