Wonga, the UK’s biggest payday lender, has agreed to sell its profitable subsidiary payments company BillPay to Scandinavian unicorn Klarna.
BillPay and Klarna offer similar services, allowing online purchases to be paid in instalments via direct debit, making the acquisition a logical one for the Swedish fintech company.
The deal is believed to be in the region in £60m, with sources stating that Wonga’s motivation for selling one of its premier assets is the consolidation and restructuring its struggling business. Wonga acquired BillPay in 2013 in the hope that the purchase would turn its ailing fortunes around but, although profitable in its own right, the venture to bring the Wonga business as a whole back to profit is yet to be successful.
BillPay is one of Wonga’s most profitable operations, providing a payments service to over 12 million customers, the majority of which are from its German market. The service is also popular in Switzerland and Austria.
Klarna was valued at$2.25bn in its last funding round, and already boasts more than 45 million customers in Europe and North America. Adding BillPay to its business portfolio will continue to strengthen its position in the Central European market.
“Germany is one of the largest e-commerce markets in the world, and we are delighted to have strengthened our position here with this acquisition,” Klarna said in a statement commenting on the deal.
Eastern Europe is still very much a region finding its identity following the breakdown of the Soviet Union over 20 years ago. Countries in the region are at various stages of economic growth and payments infrastructure development, and the e-commerce landscape looks different as you cross borders.
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