Voss Capital hopes to maximize the value of international currency express delivery | Real Time Headlines

Business: International Express It is an all-channel remittance service company. IMXI provides digital money transfer services through a network of agent retailers in the United States, Canada, Spain, Italy and Germany. It operates through company-operated stores, mobile applications and company websites. Its money transfer services include a suite of ancillary financial processing solutions and payment services covering all 50 U.S. states, Puerto Rico and 13 Canadian provinces. It provides money transfer services to Latin American and Caribbean countries, primarily Mexico and Guatemala. These services involve the transfer of funds on behalf of an originating consumer for receipt by a designated beneficiary at a designated receiving location.

Stock market capitalization: $601.9 million ($18.46 per share)

Voss engaged Discuss with the company’s board of directors and management team how to maximize shareholder value, including a possible sale of the company through a going-private transaction.

International Money Express is a money transfer service provider that assists consumers in sending money from the United States, Canada, Spain, Italy and Germany to Mexico, Guatemala and other countries in Latin America, Africa and Asia. The company provides its services through a network of authorized dealers located in various unaffiliated retail establishments, 118 company-operated stores, and digitally through its app and its website. IMXI serves more than 4 million customers each month with the goal of connecting families across borders and ensuring that those who need it most have access to financial services. The company has approximately 20% market share in the top five markets in Latin America and the Caribbean (LAC) and is continually looking to expand into new markets. For example, IMXI recently acquired National in 2022has a strong market position in sending money to the Dominican Republic and other Latin American and Caribbean countries. The company also Acquisition of I-Transfer In 2023, outbound remittance capabilities were established in Spain, Italy and Germany. I also snapped up one money services entity Launching in the UK in 2024, this will give the company the opportunity to offer outbound remittances from the UK.

For Voss, this is not an opportunistic event. The company initially reported holding IMXI in its 13F filing for the second quarter of 2021, when the company was trading at about $15 per share, and has held the stock since. Now, September 5, 2024, Voss Submitted 13D and reported ownership of 5.64% at an average cost per share of $19.14, with shares purchased as high as $20.09 in the last 60 days.

One of the things the company stated in its 13D is that it has communicated with the IMXI board and management about the possibility of selling the company through a going private transaction. Voss isn’t the only shareholder actively involved in calling for the sale of stock. The day before Voss 13D, Breach Inlet Capital Management sent an open letter Report to the IMXI Board of Directors urging them to conduct a review of strategic alternatives, including a possible sale of the company. Breach Inlet claims that despite solid operating performance and a more than 2.5-fold increase in adjusted earnings before interest, taxes, depreciation, and amortization since going public six years ago, the company remains undervalued by the public market. IMXI trades at less than 5 times trailing 12-month adjusted EBITDA, while its inter-bank remittance provider MoneyGram was acquired by private equity firm Madison Dearborn and trades at about 8 times adjusted EBITDA last June. Breach Inlet believes IMXI should be valued higher than MoneyGram rather than at a material discount, but as long as the valuation is the same it would mean a price of around $30 per share.

The global remittance services market is highly fragmented, with no single company accounting for more than 20% of the market share. Therefore, there may be opportunities for IMXI to integrate with strategic acquirers such as Western Union, which also trades at a premium to IMXI. If IMXI remains independent, its growth plans to expand into digital and European markets will require significant investments in people and resources, sacrificing short-term performance for long-term growth. This is not the type of plan that will perform well on the open market. Instead, IMXI could be a great business acquired by a private equity firm that could help fuel the company’s growth plans while insulating it from the public markets, which fail to adequately value the company. You don’t need to be a genius to see the appeal of a company like this to private equity: One private equity firm acquired it in 2007, and another in 2017.

This is not the first time Voss has advocated for a strategic review of portfolio companies. In its 13D on Benefytt Technologies, filed on December 2019 With the stock trading at about $14 a share, Voss highlighted Benefytt’s strategic opportunities and the active M&A environment in the company’s space. Benefytt was acquired by Madison Dearborn Partners on August 31, 2020, for $31 per share. Recently, in Griffin, Voss called strategic reviewThe company committed to and eventually reached the agreement, deciding to remain independent. Still, Griffon was a highly successful activist campaign for Voss, which gained a board seat, and its 13D returned 139.21%, compared with the Russell 2000’s 1.28% return over the same period.

We firmly believe that modern shareholder activism is a strategy that can significantly benefit shareholders. We believe the best type of shareholder activism involves activists who present detailed long-term plans for value creation, where a board seat is a huge advantage. On the other side is short-term “sell the company” activism, which often benefits investors but harms long-term shareholders. In this case, we’d like to see a long-term “Plan A” with a sale as a last resort, or a detailed analysis of why the company can’t or shouldn’t continue as an independent public company. While Voss didn’t offer any of this, the company does have a lot of credibility as a long-term investor (it’s been an owner since 2021) and has only now publicly made recommendations to management. Therefore, we believe Vos’s intentions are honorable and that it is doing what it believes is best for both short- and long-term shareholders.

If IMXI does not execute on its strategic plan, Voss may consider director nominations. While a proxy fight is unlikely to be part of its current plans, the company has successfully gained board representation in previous campaigns. Vos is not afraid to vote through proxy battles. In Griffon, the company fought a successful proxy fight, winning a board seat for one of its two director nominees at the 2022 annual meeting and later another board seat. Two directors will be available for election at the 2025 Annual Meeting, and the nomination window will open on February 21, 2025. There were also signs of shareholder dissatisfaction, including crude 31% retained vote Contest with Lead Independent Director Michael Purcell at the 2024 Annual Meeting

Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in activist 13D portfolios.