On the heels of a huge spike in remote working, Papaya Global is making a key purchase to expand its cloud-based HR and payroll technology globally, six months after funding $250 million. Papaya Global is purchasing Azimo, a London-based money transfer company that Facebook originally wanted to buy to help with its own remittance operations. As a result of the agreement, Papaya Global will expand into new areas and offer new services like fast payroll payments.
The deal’s terms aren’t being made public, but a source close to the companies tells me it was worth between $150 million and $200 million, a figure that others appear to have reported as well. When the transaction closes, Papaya will take over the entire company, including all of Azimo’s employees.
For comparison, Papaya Global, backed by Insight Partners and Tiger Global, was valued at $3.7 billion in its most recent investment round in September 2021, after increasing revenues by 300 percent annually for the previous three years.
Meanwhile, Rakuten and Greycroft have invested in Azimo, which competes with the likes of Wise (FKA TransferWise). When Facebook first began considering a foray into money transfer services several years ago, both businesses were on a shortlist (a service it now provides).
On two levels, the agreement will benefit Papaya Global.
First, it will help it expand its geographic footprint: Azimo currently has payment licenses in the United Kingdom, the Netherlands, Canada, Australia, and Hong Kong, and it operates a payment network in more than 160 countries, whereas Papaya Global (not to be confused with the other fintech called Papaya) only had services in 150 countries prior to this deal, according to Eynat Guez, Papaya Global CEO and co-founder.
Second, it will assist Papaya Global in expanding its services. These include not only speedier (immediate) payroll payment, but also a potentially far broader range of remittance services for those who work in one country but have relatives or others to pay.
“Our long experience in establishing payment technology and functioning as a regulated payments business will greatly benefit Papaya’s consumers,” Azimo CEO Richard Ambrose said in a statement.
It also fits into Papaya Global’s long-term strategy of providing an all-in-one, end-to-end service for its customers, which includes not only employers sourcing and eventually hiring people in other markets (whether freelancers, full-timers, or somewhere in between), but also an increasing number of services for those employees.
“What sets us apart from other technology vendors is our ability to make payroll payments simple regardless of geography,” Guez said in a statement. “With this acquisition, companies will be able to make instant payments to their global teams.” “Azimo’s global digital payment network, with different payment options”
Azimo told us in 2019 that it was profitable, and that was also the last year the company obtained equity funding. (The European Investment Bank provided a debt injection of €20 million or $22 million in 2020.) However, in competing against Wise, the company was perhaps not scaling as much as it may have been had it pursued a different funding path, particularly during the recent pandemic years, when the remittance market experienced tremendous demand. According to PitchBook, the company was valued at $136 million in 2019.
Furthermore, given how fragmented the remittance industry is now and how low the margins are for those who are not scaling, there has been a long-term trend of market consolidation—one that will continue for years to come. Tying its star to Papaya Global and expanding its service offering to include HR and payroll is one method for Azimo to supercharge its business in a way that would have been more difficult on its own.
In a statement, Azimo chairman and founder Michael Kent said, “Combining Azimo’s assets and expertise with an emerging global leader in remote working enablement like Papaya will allow them to deliver even more value for their business customers, especially those increasingly paying and managing remote employees.”
