Nexi S.p.a. · MIL:NEXI
Nexi — Merger or Acquisition (November 2020)
51 slides from Nexi's merger presentation, Nov 16, 2020
Slide 1: Creating The European PayTech Leader
Creating The European PayTech Leader Strategic Combination Between Nexi and Nets 16 November 2020 1
Slide 2: Legal Disclaimer
Legal Disclaimer This Presentation may contain written and oral “forward-looking statements”, which includes all statements that do not relate solely to historical or current facts and which are therefore inherently uncertain. All forward- looking statements rely on a number of assumptions, expectat
Slide 3: Three Key Messages
Three Key Messages We are creating Nets is We will execute a stronger Nexi a growth PayTech effectively • More growth potential • Transformed since 2018 • Clear, focused and phased integration plan • More resilience • Executing a strong growth plan • Strong and experienced team in place 3
Slide 4: Creating The European PayTech Leader
Creating The European PayTech Leader + A Powerful European Strategic Combination Largest scale European PayTech Product, technology and capabilities Scaled acquiring platform with present in most attractive markets powerhouse across payments ecosystem enhanced eCom proposition Superior financial and
Slide 5: Creating The European PayTech Leader
Creating The European PayTech Leader Highlights Nexi + Nets + SIA Combined Reach(1) Addressable market expanded >4x to €4.6tn in terms of consumer spend Largest PayTech in Europe as a result of major European players joining forces with average digital payments penetration of 33%(3) • Present in >
Slide 6: The New Nexi Group at a Glance
The New Nexi Group at a Glance Revenue Mix by Business(1) Revenue Mix by Geography(1) Revenue Concentration by Customer(1) 3% Top-10 16% ~20% of divisional 6% 19% 27% revenue from online 9% 8% 50% 54% vs 48% for Nexi 33% 26% standalone Merchant Services & Solutions Top-5 Italy Nordics DACH Card and
Slide 7: Transaction Highlights & Rationale
Transaction Highlights & Rationale 7
Slide 8: Transaction Highlights
Transaction Highlights • Largest pan-European platform with the scale to drive superior product and efficiency leadership • Significant growth potential from leadership and exposure to key attractive European markets • Full solution portfolio across payment ecosystem, with key strengths in acquiring
Slide 9: Transaction Highlights (Cont'd)
Transaction Highlights (Cont’d) • Strategic combination of Nexi and Nets structured as an all-share cross-border merger on the basis of equivalent 2020 EBITDA multiples with Nets’ shareholders receiving 407m new Nexi shares • Based on Nexi share price as of 13 November, Nets’ Enterprise Value of €7.
Slide 10: Transaction Highlights (Cont'd)
Transaction Highlights (Cont’d) • Group Chair: Michaela Castelli • Group CEO: Paolo Bertoluzzo Governance • Bo Nilsson, current CEO of Nets, will become non-executive Board member of Nexi and Chairman of Nets • Hellman & Friedman will appoint also another Board member as a result of the transaction
Slide 11: Nets – A Deep Transformation Creating a European Growth PayTech
Nets – A Deep Transformation Creating a European Growth PayTech At 2018 take private Today M&A-led Growth Levers Business Mix Business Mix Significantly More than increased Corporate doubled online Merchant Services exposure to high Services disposal ~30% from Merchant exposure Merchant Services >60
Slide 12: Nets at a Glance
Nets at a Glance Group Overview Key Financials (€m)(1) • Nets is a leading integrated Pan-European PayTech player, with a leadership position in advanced digital payments markets (i.e. Nordics), large underpenetrated economies (Germany), as well as in €1.1bn €387m underpenetrated markets with signif
Slide 13: Nets Key Reference Geographies
Nets Key Reference Geographies Nordics Poland Key Figures(1) Merchant Services Key Figures Consumer Card Card payments Issuer & eSecurity Services Consumer Card Card payments Spend penetration CAGR ’17-19 Spend penetration CAGR ’17-19 Full proposition €0.6tn 67% 6%(4) Greenfield €0.3tn 31% 20% Key B
Slide 14: Nets Merchant Services ("MS")
2019 revenue Nets Merchant Services (“MS”) 62% Sub-Segment Description Key Figures Divisional Revenue (2019)(1) Highlights €664m 740k 440 2019A revenue Merchant RGUs(3) Direct sales FTEs SME • Digital, integrated product proposition 6 (Small & 54% • VAS portfolio on data/insight, merchant finance a
Slide 15: Nets eCom: Strong Proposition Driving Accelerated Growth
Nets eCom: Strong Proposition Driving Accelerated Growth eCom Solutions Geographic Footprint • Fast integration with single set of growing APIs – low friction to win new business Gateway / • Single collecting contract for all payment methods – high value to merchants PSP • One-click checkout with cr
Slide 16: Nets Issuer & eSecurity ("IeS")
38% 2019 revenue Nets Issuer & eSecurity (“IeS”) Sub-Segment Description Key Figures Divisional Highlights Revenue (2019) €401m 40m+ >50 23% of Revenue 2019 Cards managed Direct sales FTEs Group revenue • End-to-end issuer services provider: core payment Nordic processing, account management and fra
Slide 17: Nets – Issuer Processing Business Reshaped and Ready for Growth
Nets – Issuer Processing Business Reshaped and Ready for Growth • The Nordic Issuers business represents 23% of Nets’ total revenue in 2019 • Over the last 2 years the Nordics Issuer business has been reshaped through renegotiation of customer contracts and rebasing to market pricing • Issuer platfo
Slide 18: Nets – Organic Underlying Growth Driven by Acquiring and eCom
Nets – Organic Underlying Growth Driven by Acquiring and eCom • Strong underlying top-line performance in 2019 YoY mainly driven by growth in eCom and SME acquiring, adjusted for non-recurring effects for IeS only • 2020 financial performance resilient to COVID-19 with underlying EBITDA up ~6% mainl
Slide 19: Nets – Highly Experienced and Committed Management Team
Nets – Highly Experienced and Committed Management Team Strengthened by Recent Key Hires Nets Executive Management Team 7 • Strong international top Bo Nilsson Years at Nets Group CEO management with ~30 years 30 experience Years’ experience • Unparalleled industry and cross disciplinary background
Slide 20: Creating The European PayTech Leader
Creating The European PayTech Leader 1 Largest pan-European platform with the scale to drive superior product and efficiency leadership 2 Significant growth potential from leadership and exposure to key attractive European markets 3 Full solution portfolio across payment ecosystem, with key strength
Slide 21: Largest Pan-European Platform with the Scale to Drive Superior Product and Efficiency Leadership
1 Largest Pan-European Platform with the Scale to Drive Superior Product and Efficiency Leadership Ranking by European EBITDA(1) 2019 (€bn) Pan-European Scale Unlocking Significant Industrial Benefits Efficiency and • Enhanced operational scale driving cost competitiveness and industry- 1.5 operat
Slide 22: Leadership Position in Key Attractive European Markets
2 Leadership Position in Key Attractive European Markets Nexi + Nets + SIA Combined Reach(1) Unique Portfolio of Underpenetrated and Advanced Markets Leading Player Italy Nordics DACH Poland CSEE(3) Top-3 Core Top-5 Geographies Greenfield €1.1tn €0.6tn €2.2tn €0.3tn €0.5tn Consumer Spend Total: €4.6
Slide 23: Significant Upside Potential through a Fast-Growing European Footprint
2 Significant Upside Potential through a Fast-Growing European Footprint 100% Card Flag size indicates addressable market New Nexi Addressable Market (’19) penetration(1) size in terms of consumer spend 90% 80% >4x €1.1tn Consumer spend €4.6tn 70% 24% Card penetration 33%(3) 60% +8% Volume CAGR 17-1
Slide 24: Full Solution Portfolio across Payment Ecosystem, with Key Strengths in Acquiring and eCom
3 Full Solution Portfolio across Payment Ecosystem, with Key Strengths in Acquiring and eCom Key Nets contribution Merchant Services and Solutions Cards and Digital Payments Digital Banking and Corporate Solutions SME Solutions Card-based Solutions Banks & Central Institutions Solutions Pay-By- Link
Slide 25: Superior Merchant Services & Solutions Proposition Across Customer Verticals
3 Superior Merchant Services & Solutions Proposition Across Customer Verticals Unique Superior SME Proposition European eCom Platform at Scale Industry Specific Omni-channel LAKA Solutions Segmented offering for local and regional International merchants flexible gateway Leading-edge SmartPOS
Slide 26: Best-of-breed Technology Platform Leveraging on Complementarity and Scale
4 Best-of-breed Technology Platform Leveraging on Complementarity and Scale Merchant Services Domain Cards & Digital Payments Domain Digital Banking & Corporate Solutions Domain Merchant portals & apps Mobile apps & portals A2A payment apps Digital Integrated collection Open Banking corporate soluti
Slide 27: World-class Technology Capabilities at Scale Ranging from Digital to Processing
4 World-class Technology Capabilities at Scale Ranging from Digital to Processing, from Gateway Technologies to Infrastructure Cutting-Edge Product • 700 dedicated professionals €50bn eCom transaction value on 3 gateways Development Capabilities in eCom and Omni-channel • 7 centres of competence i
Slide 28: Significant Value Creation from Highly Visible and Properly Phased Synergies
5 Significant Value Creation from Highly Visible and Properly Phased Synergies Synergies Overview Amount Areas 1 • Rationalization of all IT & tech platforms with gradual, phased timeline to ~€170m account for ongoing development and migrations Total Recurring Cash Cost Synergies • Creation of share
Slide 29: Driving Revenue Synergies through Cross-selling, New Capabilities and New Propositions Roll-out
5 Driving Revenue Synergies through Cross-selling, New Capabilities and New Propositions Roll-out Pan-European Capabilities Cross-fertilization Cross-selling of existing best-of-breed solutions across client PayLater eCom LAKA Omni-channel base and geographies, with strong focus on merchant servic
Slide 30: Superior Profitability and Cash Generation at Scale with Enhanced Resilience
6 Superior Profitability and Cash Generation at Scale with Enhanced Resilience Revenue Mix by Geography Combined Financials(1) + + (2020E Pro-forma 3% 6% Italy Nordics including run-rate synergies) 9% 54% DACH CSEE 26% Revenue €2.9bn Poland Other MS Revenue Mix Revenue by Customer EBITDA €1.5bn / Pa
Slide 31: Uniquely Positioned for Further Organic and Inorganic Growth
7 Uniquely Positioned for Further Organic and Inorganic Growth 5 M&A opportunities 4 • In-market bolt-on / Further Margin merchant books Expansion • Bank-owned payment assets • Product / tech capabilities 3 Strategic Growth • Longer-term integration enhancement Innovation synergies Opportunities • T
Slide 32: A Clear, Phased Execution Plan to Deliver Value Short Term and Long Term
A Clear, Phased Execution Plan to Deliver Value Short Term and Long Term Key Principles Focus 2021 Focus 2022 Longer-term Goal One focused transformation program led by a highly • One focused transformation program experienced leadership team across workstreams • Clear integration priorities and pha
Slide 33: Clear and Focused Synergies Initiatives, with Limited Overlaps
eCom & omni-channel Legend proposition SME next-gen MS proposition Product upgrade to partner banks Stronger value proposition to Revenue Synergies Italian banks C&DP Stronger value proposition to international banks B2B innovative payment solutions DBS Merchant services Key platform consolida
Slide 34: Value Creation & Financial Benefits
Value Creation & Financial Benefits 34
Slide 35: Value Creation and Financial Benefits
Value Creation and Financial Benefits Key Considerations Highlights 1 • Total recurring cash synergies of ~€170m Nets + SIA generate 2022 Cash EPS(1) Significant Value Accretion of >25% with run-rate Creation from • Properly phased synergies with low execution risk, in addition to those arising fr
Slide 36: Financial Profile of the Combined Group
Financial Profile of the Combined Group Based on 2020E Figures (1) (2) Recurring Combined (€bn) + + + Synergies(3) = (2020E, including run-rate synergies) (4) Net Revenues 1.03 1.05 0.74 0.11 2.88 EBITDA 0.58 0.38 0.28 0.27 1.50 EBITDA Margin 56% 36% 38% 52% Ordinary (0.09) (0.12) (0.09) 0.05 (0.24)
Slide 37: Sizeable, Right-Phased Recurring Cash Synergies
Sizeable, Right-Phased Recurring Cash Synergies Recurring Synergies (€m) Highlights Total recurring cash synergies of ~€170m Tech Platforms Optimisation ~40 • ~€135m run-rate EBITDA synergies Insourcing and • ~€95m of cost synergies ~25 Operational Excellence • ~€40m of EBITDA uplift from revenue
Slide 38: Highly Visible Cost and Capex Synergies with Low Execution Risk
Highly Visible Cost and Capex Synergies with Low Execution Risk • ~€95m of cost synergies and additional ~€35m recurring savings from right-sizing of tech investments • Majority of synergies expected to be realized starting from 2022 (key focus in 2021 will be on delivery of Nets standalone business
Slide 39: Nets + SIA Combined Synergies Driving Compelling Value Creation
Nets + SIA Combined Synergies Driving Compelling Value Creation Recurring Synergies (€m) Highlights Nets Tech Platforms Optimisation ~90 Total recurring cash synergies of ~€320m, SIA including both Nets and SIA Insourcing and Operational Excellence ~60 • ~90% of cost synergies achieved by 2024 Pro
Slide 40: Increasingly Diversified Group with Resilient Revenue Streams
Increasingly Diversified Group with Resilient Revenue Streams Revenue Mix (Pro-forma)(1),(2) By Business By Geography By Type By Partner / Customer Digital Banking o/w ~5% License-related Merchant Poland Installed Base & Corporate and ~4% Projects-related Services & CSEE 3% 38% Solutions 16% Solutio
Slide 41: Diversified Acquiring Exposure with Strong Risk Management Framework
Diversified Acquiring Exposure with Strong Risk Management Framework Highly fragmented merchant Limited exposure to high-risk verticals, with Travel accounting for ~5% of total net MSC base with very limited exposure (18% of total transaction value compared to 14% for Nexi) to high-risk vertical
Slide 42: Significant Reduction in Transformation and Restructuring Costs
Significant Reduction in Transformation and Restructuring Costs Transformation and Restructuring Costs (€m)(1) (45)% Transformation only • Transformation costs include one-off consulting expenses related to commercial (15)% enhancing initiatives and investments in tech platform (55)% 142 ~120 • R
Slide 43: Proven Operating Leverage Increasing Profitability and Cash Generation
Proven Operating Leverage Increasing Profitability and Cash Generation Best-in-Class Cash Generation €1.2bn >€2bn Pro-forma Cash generated Operating Cash Flow over 3 years(2) Generation(1) (incl. phased synergies) (incl. run-rate synergies) Unlocking Disciplined Powerful Significant Capital Delevera
Slide 44: Cross-border Merger Supported by Reference Shareholders
Cross-border Merger Supported by Reference Shareholders • All-share cross-border merger between Nexi and Nets with no incremental debt raised by Nexi as a result of the transaction Months Transaction Structure Pro-Forma Ownership (post Nets and SIA Mergers)(7) • All-share cross border merger on the
Slide 45: Closing Expected in Q2 2021 ahead of Completion of SIA Merger
Closing Expected in Q2 2021 ahead of Completion of SIA Merger • Closing of the merger with Nets expected in 2Q 2021 • The transaction is independent of the merger with SIA, for which signing is expected within 2 months and closing in 3Q 2021 Illustrative timeline 4Q’20 1Q’21 2Q’21 3Q’21 Regulatory a
Slide 46: Closing Remarks
Closing Remarks nexi
Slide 47: Three Key Messages
Three Key Messages We are creating Nets is We will execute a stronger Nexi a growth PayTech effectively • More growth potential • Transformed since 2018 • Clear, focused and phased integration plan • More resilience • Executing a strong growth plan • Strong and experienced team in place 47
Slide 48: Q&A
Q&A nexi 48
Slide 49: Annex
Annex nexi
Slide 50: Reconciliation with Statutory Nets A/S Financials
Reconciliation with Statutory Nets A/S Financials 2018 Revenues (€m) 2019 Revenues (€m) EBITDA (€m) EBITDA (€m) Underlying EBITDA(1) (€m) Underlying EBITDA(1) (€m) 1,016 1,065 918 988 732 B 747 B C C A A 266 376 318 295 387 345 Nets A/S Like-for-like Pro-forma for Pro-forma Normalization Underlying(
Slide 51: Details on Nets Financials
Details on Nets Financials Nets Group Revenue (€m) 2018 2019 2020E 3Q19 3Q20 Reported revenue 1,016 1,065 1,049 271 273 Growth 4.8% (1.5%) 0.7% Underlying revenue(1) 918 988 991 252 261 Growth 7.6% 0.4% 3.7% Merchant services (€m) 2018 2019 2020E 3Q19 3Q20 Reported revenue 611 664 667 170 177 Growth