FinTech in Troubles: Unzer’s Financial Turbulence and Restructuring Efforts

tamir
Fri, 12 Jan 2024 09:32:09 +0000
Fintech, High-risk payment processors, Heidelpay, KKR, Unzer

In a startling revelation for the fintech sector, Berlin-based payment service provider Unzer, previously known as Heidelpay, reported a staggering loss of €381 million in 2022. This figure notably surpasses the company’s turnover, highlighting deep-rooted financial challenges. According to the recently published annual report, turnover amounted to just under €200 million, around 30% below the target figure the company set itself.

Rapid Downfall from Ambitious Aspirations

Unzer’s journey from a potential market leader to a financially troubled entity is marked by several critical events:

1. Aborted Expansion: U.S. investor KKR abandoned its grandiose plans to scale Unzer into a market leader.

2. Ownership Shift: Majority shares transferred to a consortium of creditors.

3. Debt and Equity Restructuring: Creditors injected fresh equity and forgave parts of the debt in a bid to salvage the company.

The annual report disclosed that Unzer‘s turnover was just under €200 million, falling short by 30% of its targeted goals. The loss was primarily attributed to a massive €381 million, with significant write-downs totaling 348 million euros owing to the amortization of goodwill from previous acquisitions. The loss already amounted to almost 120 million euros in 2021.

Strategic Shifts and Challenges

The company has long been majority-owned by financial investor KKR. Last year, Unzer received funding from several other investors who acquired a majority stake in the company. Unzer has strategically distanced itself from problematic online customers, particularly in the “digital entertainment” sector, which often includes high-risk industries like pornography and gambling. The payment processor’s primary revenue comes from processing payments in e-commerce and at points of sale, charging merchants a nominal fee.

Regulatory Scrutiny

In 2022, Unzer faced intense scrutiny from the financial supervisory authority BaFin, which identified substantial deficiencies in the company’s operations. BaFin imposed a new customer acquisition ban on Unzer E-Com GmbH and appointed a special auditor to address these issues. The audit uncovered significant lapses in corporate governance, control mechanisms, procedures, and anti-money laundering efforts.

Unzer operates in a highly competitive sector with thin margins, competing with major players like Concardis, Payone, Adyen, and Stripe. The challenge is to process a high volume of transactions efficiently to reduce per-transaction costs.

Leadership and Future Outlook

Advisory Board: In late 2022, Martin Blessing, former CEO of Commerzbank, was appointed as Chairman of Unzer‘s Advisory Board.

CEO’s Vision: Robert Bueninck, CEO since late 2021, expressed confidence in the company’s revamped business plan and strategic investments.

Projected Growth: For 2023, Unzer aims for a turnover exceeding 210 million euros, slightly higher than the previous year.

Unzer‘s story reflects the volatile nature of the fintech industry, where ambitious expansion plans can quickly unravel under financial strain and regulatory pressures. The company’s future now hinges on its ability to navigate these challenges and reposition itself in the competitive payment processing market.