The year 2024 proved relatively quiet for initial public offerings (IPOs) in the cross-border payments sector, a stark contrast to the flurry of public market entries witnessed in 2021. Several companies opted to delist, often through acquisitions by private equity firms, rather than brave the uncertain market conditions. This trend signaled a shift in the financial landscape, with investor enthusiasm for special purpose acquisition companies (SPACs) waning and market volatility creating a more cautious environment. While some companies, particularly those focusing on retail payments and undergoing digital transformations, found refuge in private ownership, the stage was set for a potentially more dynamic 2025.
The year 2025 holds the promise of a resurgence in cross-border payments IPOs, albeit under altered circumstances. Market conditions, while showing positive signs with rising indices like the S&P 500 and FTSE 100, remain susceptible to potential volatility stemming from anticipated policy changes, particularly in the US. Unlike the 2021 cohort of companies that debuted at peak valuations, many potential entrants in 2025 are still recovering from the post-pandemic market slump. Companies like Stripe, while significantly increasing their valuation in 2024, remain below their 2021 highs, illustrating the challenges in achieving optimal valuations in the current climate. This creates a delicate balancing act for companies seeking the best possible entry point while market sentiment remains positive.
Several mature players in the cross-border payments space are poised for public debuts, having weathered the market downturn and positioned themselves for growth. Companies like Ebury and Klarna have already initiated the IPO process by appointing banks, while others like Nium have publicly targeted 2025. The key challenge for these companies will be to secure attractive valuations amidst the lingering market uncertainties. Investors, mindful of the potential for volatility, will be seeking strong returns while also cognizant of the need to capitalize on favorable market windows before they potentially close.
A notable trend emerging in the cross-border payments sector is the increasing prevalence of private equity-backed exits from the public markets. Following MoneyGram’s acquisition by Madison Dearborn Partners in 2023, other companies, particularly those with a traditional retail focus undergoing digital transformations, are exploring similar paths. Intermex, for example, has publicly announced its consideration of a private equity deal. This trend also extends to facilitating financial restructuring and M&A activity, as seen with Nuvei’s acquisition by Advent International and the spin-off of Worldpay from FIS, backed by GTCR. These moves highlight the growing appetite of private equity firms for cross-border payments companies, recognizing the potential for growth and consolidation within the industry.
The attractiveness of the cross-border payments sector for private equity investment is underpinned by several factors. The industry boasts a substantial total addressable market (TAM), projected to reach $65 trillion by 2032, offering significant opportunities for expansion. The ongoing shift towards digital payments and the potential for further industry consolidation further enhance the appeal for investors. Consequently, private equity firms are increasingly viewing cross-border payments companies, especially those experiencing valuation dips, as attractive targets for investment-fueled turnarounds. This creates a competitive landscape where private equity acquisitions and public market debuts may coexist, depending on individual company circumstances and market dynamics.
The outlook for the cross-border payments industry in 2025 is characterized by both opportunity and uncertainty. The potential for a resurgence in IPO activity hinges on the continuation of favorable market conditions, which could be disrupted by macroeconomic factors such as trade tariffs and policy changes. These external factors could impact not only company valuations but also global trade flows, directly affecting the businesses of cross-border payments providers. While some companies may benefit from these shifts, others may face challenges, contributing to an overall sense of uncertainty. Ultimately, 2025 promises to be a dynamic year for the industry, marked by a mix of public market entries, private equity deals, and ongoing adaptation to the evolving global economic landscape.
