SoftBank to invest over 1 bln USD in German payment company Wirecard

WNM | Apr 24, 2019 at 1:19 PM

BERLIN, April 24 (WNM staff/Reuters/Xinhua) -- The Japanese SoftBank Group will invest approximately 900 million euros (1.09 billion U.S. dollars) in convertible bonds issued by Wirecard, the Munich-based global payment service provider announced on Wednesday.

After five years, the bonds to be acquired by SoftBank will convert into a 5.6 percent stake in Wirecard at a price of 130 euros per share, the German payments provider said.

The sale of the bonds will be formally voted on by Wirecard's shareholders at the annual general meeting on June 18. "In SoftBank we have found a partner that shares both our passion for new technologies and drive to spearhead the latest innovations, all on a global scale," commented Markus Braun, chief executive officer (CEO) of Wirecard.

SoftBank "will seek to support Wirecard's geographic expansion into Japan and South Korea" and the companies would collaborate on data analytics and artificial intelligence, according to Wirecard. The German payment service provider added that it expected the partnership with the Japanese company to extend to joint exploration of "new product and service offers in digital lending".

Wirecard is a DAX-listed company that has seen major drops in share prices after media reported about alleged fraud committed by Wirecard subsidiaries in Singapore. Wirecard repeatedly denied wrongdoing and was largely cleared of the allegations by an audit report of the law firm Rajah & Tann. Back in February, the German financial regulator German Federal Financial Supervisory Authority (BaFin) had banned short trading in Wirecard for two months which was lifted last week.

The announcement of SoftBank's investment was received positively on the German stock exchange as shares in Wirecard jumped almost 9 percent to 134 euros in early trading on Wednesday Other Softbank investments in its Vision Fund range from ride-sharing giants including Uber, DiDi, Grab and Ola to new financial and business services such as WeWork. Analysts said the partnership could provide further growth opportunities for Wirecard.

Germany's Finance-magazine reports:

Softbank's investment is also an important vote of confidence in the Bavarian payment service provider, which has been repeatedly exposed to allegations of fraud in recent years. In recent months, the pressure on the Munich-based company has continued to increase after a journalist reported to the British business newspaper "Financial Times" (FT), citing internal Wirecard documents, that a senior Wirecard employee in Singapore had allegedly concealed several suspicious transactions. The employee is no longer said to be working for Wirecard.

One consequence of FT reporting was a decline in the Wirecard share price from around 167 euros at the end of January to 96 euros at the beginning of February - almost 10 billion in market capitalization were destroyed. In the meantime, Wirecard has sued FT for damages.

The slide in the share price assumed such proportions that the Federal Financial Supervisory Authority (Bafin) felt compelled to take a historic step: the authorities issued a short-selling ban on the Wirecard share. This ban on so-called "short sellers" from Germany and abroad lasted until last Thursday.

Meanwhile, the Bafin is also suing "around a dozen people", as the magazine "Spiegel" reports. Specifically, the Bonn financial supervisory authority suspects FT journalists of "having made common cause with several funds or individual investors".