Shares in Australian fintech EML Payments have been halted pending a notification from the Central Bank of Ireland that is expected to highlight “significant regulatory concerns” about Prepaid Financial Services, the Irish firm it acquired in 2020.
EML intially agreed a €253.8 million fee plus an earn-out component worth £55 million for Prepaid Financial Services in 2019, By the time the deal closed, it had negotiated a €105 million discount, citing "economic realities" from the Covd outbreak as its primary reason for revising the purchse price.
PFS, which employs more than 100 people in Meath, provides electronic payment products, including e-currencies and virtual and physical prepaid cards in more than two dozen countries.
In a statement to the ASX announcing the share suspension, EML says: "The reason for the trading halt is to facilitate an orderly market in EML’s securities pending an announcement by EML in relation to significant regulatory concerns notified by the Central Bank of Ireland, and received by EML on Friday 14 May 2021, relevant to the Prepaid Financial Services business that EML acquired on 31 March 2020."
PFS is one of five companies that became embroiled in a cartel scandal in the UK pre-paid cards market, where the Payment Systems Regulator (PSR) alleged anti-competitive behaviour in the welfare payments market by agreeing not to compete or poach each other's clients.
The provisional fine lodged by the PRS on PFS amounted to £1 million, below the £5 million contingency held in reserve at the time of the sale to EML.