PayTech Cornerstone offloads e-money subsidiary for £600k
By Gloria Methri
Cross-border payments and foreign currency management firm Cornerstone FS has decided to sell its e-money institution subsidiary ‘Avila House’ to Aspire Commerce, the UK-based provider of payment accounts and lending services for £600,000.
The parties have also entered a software licencing agreement for Aspire to licence the Cornerstone platform for 12 months, which will generate at least £290,000 for the company.
Cornerstone acquired Avila in October 2020 to gain a Small Electronic Money Institution. In August 2021, the Group’s primary operating subsidiary, Cornerstone Payment Solutions Ltd gained approval from the Financial Conduct Authority (FCA) as an Authorised Electronic Money Institution.
The Board believes that it is in the best interests of the company to realise the value of this non-core asset through its disposal to Aspire, a non-competing entity, while also monetising the underlying Cornerstone platform as part of the transaction. In addition, Aspire will utilise Cornerstone’s services for any foreign exchange payments made on behalf of its clients. The proceeds from the sale of Avila will be used to strengthen the company’s existing cash resources.
James Hickman, CEO of Cornerstone, said, “This is an excellent deal for Cornerstone and reflects the value of an e-money registration as well as our platform. As we have said previously, we have experienced strong trading momentum throughout the year, and it is great to now be ending 2022 having secured an additional £600,000 for next year. We look forward to reporting on our further progress.”
For the year 2021, Avila reportedly generated revenue of £197,996 and a profit of £2,418.
The completion of the SPA is conditional upon receipt of regulatory approval from the FCA, which is expected to occur in Q1 2023. The proceeds of the sale will be received by Cornerstone upon completion. Under the terms of the licencing agreement, the company will receive revenue in stages over the 12-month period, with the majority expected to be recognised in the second half of 2023.
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