CAB Payments Under Pressure from Private Equity Bid

Bhairav Trivedi, the former chief executive of CAB Payments, has publicly backed a takeover bid from private equity firm Helios, contradicting the company’s board. This announcement follows Helios’s bid to acquire CAB for $292 million, putting a spotlight on internal divisions within the company.

Trivedi, who left CAB two years ago after a tumultuous tenure, stated he would utilise his 2.37 per cent shareholding to support Helios’s offer, which values the shares at $1.15 each. His endorsement of the proposal adds intrigue to the ongoing negotiation, particularly as Helios maintains significant ties to CAB, having previously owned the payments firm before its public listing.

Helios currently holds 45.1 per cent of CAB’s stock, and with Trivedi’s backing, along with support from Eurocomm Holding, a total of 52.7 per cent of shares are now aligned with the takeover attempt. This puts CAB’s board in a difficult position, as they had previously dismissed Helios’s offer as opportunistic and undervaluing the company.

CAB Payments traces its origins back to the Crown Agents Bank, which managed financial transactions for colonial governments. Today, the company provides cross-border payments and foreign exchange services to various sectors including businesses, governments, and NGOs in emerging markets. Following its public listing, CAB was valued at £851 million; however, its stock has suffered a decline due to profit warnings, trading significantly below the initial public offer price.

In light of the ongoing market changes, including increasing regulatory pressures and the emergence of digital currencies, Helios has argued that CAB’s long-term success would be better preserved under private ownership. The private equity firm asserts that CAB has not demonstrated the necessary operational capability post-IPO to evolve in such a rapidly changing environment.

As per regulations by the Takeover Panel, Helios must submit a formal offer or withdraw by March 2. This marks the second attempt by Helios to acquire CAB, with a prior bid of $1.05 per share being rejected by the board, which has raised questions regarding the future direction of the payments company.

The contrasting viewpoints between Trivedi and CAB’s current leadership indicate a volatile environment within the organisation as stakeholders assess the viability of the private equity proposal.