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Only 168 days since that first trade, EML Payments’ board has ripped up the company’s strategy, replaced the CEO and called in the bankers to consider selling the business and/or its parts as announced on Monday morning.
The announcement was signed off by a new board put together only two months ago and including Alta Fox founder Connor Haley, an American, and former UBS banker and Afterpay CFO Luke Bortoli who is now EML Payments chairman.
The new crew also includes investment bank Barrenjoey, tasked with the strategic review.
Alta Fox track record
It’s about as wholesale as changes at a company can get, and largely sparked by Alta Fox, a small investment manager that targets underperforming companies, management teams and boards.
Alta Fox has gone after US-listed toys and games maker Hasbro and digital billboards group Daktronics in the past 12 months with mixed success, and now ASX-listed EML Payments. It fishes in small caps globally, moving quickly once buying in and often using M&A to create value.
While it’s one thing to turn up and demand changes, it’s another to make money for shareholders. EML Payments has performed terribly for investors, with its shares down 77.8 per cent in the past year and nearly 50 per cent in the past five years.
Task No. 1 for the interim CEO Kevin Murphy, a former Bank of Ireland cards business executive, is getting on top of regulatory issues that have dogged the company for the past two years. It has underlying anti-money laundering/KYC issues, and the Central Bank of Ireland on its back.
While Murphy deals with the regulator, Barrenjoey’s bankers will try to drum up interest in the company and/or its assets. EML Payments has attracted serious interest from the likes of Bain Capital and Canada’s Nuvei Corp in the past year or two, but couldn’t agree on terms, often pushing suitors for unrealistic prices.
M&A is expected to feature heavily in Alta Fox’s playbook which, for now at least, seems to be in line with the wider EML Payments board’s thinking.
Investors liked what they saw on Monday morning, pushing EML Payments shares up 13.9 per cent to 66¢. However, it will be a long way back to $5 plus, where the stock traded only two years ago.
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