CAB Payments chief: Why we’re listing in London
At the start of June, chances are most in the City hadn’t heard of Bhairav Trivedi and Sutton-based business-to-business money transfer firm CAB Payments.
The suburban fintech is the sort of payments plumbing firm that trundles along successfully in the background, championed by its customers and those in the know but largely untroubling the wider public debate.
Fast forward three weeks, and CAB’s IPO plans are being touted overdramatically as the first shoots of a potential revival in the Square Mile. An arid period of public markets activity has ramped anxiety to fever pitch and Trivedi and CAB are seen as just the tonic needed.
Still though, calm and collected, he seems unphased by the elevation of his float plans into a totemic City event.
“You know, there’s always a little concern about that, but it’s not overly concerning for us,” he tells City A.M. in an interview.
“I’m very bullish on the geography, on the market, on the investors. We’ve got very, very favourable reactions from the investors. That’s what we’re looking forward to.”
CAB’s IPO plans announced earlier this month appeared after a barren start to the year in which cash raised via IPOs plummeted some 80 per cent in the first quarter. The drip-drip of firms towards New York meanwhile fuelled fears that London was in terminal tech decline.
But Trivedi, the former chief of Middle Eastern payments giant Network International, threw the market some red meat as CAB revealed its plans in early June. London, he said, was the “home for innovative and growing global businesses”.
Not quite a flashy fintech
CAB, however, might not be the immediate flashy fintech image that ‘innovative and growing business’ brings to mind. The firm has sprung out of the 190-year old British lender Crown Agents Bank and now sits above the UK-licensed entity as its parent company.
The reason for carving out the holding firm is because it will soon have “other pieces of the pie”, Trivedi says, with CAB Europe, CAB America and CAB Asia Pacific all rolled out under that umbrella.
That international footprint will play into its historic role in the British empire, which Trivedi says was essentially a precursor to the payment-rails role it performs today.
“We were part of the legacy crown, and we were taken into various colonies to help establish financial infrastructure. So that actually allowed us to lay the payment rails in all of these geographies,” he says. “We set up partnerships with governments, central banks and we licensed entities. That I think of as a foundation setting.”
While it digitised heavily after an injection of private equity cash from Helios Investment Partners, rolling out an FX trading platform and payments gateway for emerging markets, the fundamentals remain similar to its role 190 years ago: providing the financial infrastructure for the transfer of cash across borders.
CAB’s bread-and-butter is now payments between businesses in developed and emerging markets with an average ticket size of around £100,000.
Home float
That long history might in some part point to why it was always destined for a London listing. But Trivedi says he and the firm feel there are more pressing contemporary reasons too.
London has been plunged into a period of soul searching this year after its attempts to promote the market as a tech hub have fallen on largely deaf ears. While ministers and regulators have rolled out reforms, it is still a fairly threadbare smattering.
“The UK market does need some level of impetus right now,” Trivedi says. “And we want to be the key ingredient that will give it the lift it needs.”
Part of it is also CAB’s “innate bullishness about the UK economy and the UK as a listing venue”, he says.
Trivedi will also look to tap into a pool of hopefully tech-starved investors that are crying out for a firm like CAB. British investors, he says, have a “much better understanding of the global impact of where we are and what kinds of things we do”.
It’s a more glowing assessment of London’s investor base than has been dished out recently. CAB’s float plans came alongside those of Turkish soda ash firm WE Soda, which were quickly ditched on the back of what its boss called “extreme investor caution”.
Roadshow
The appetite so far has been quite the opposite for CAB, Trivedi claims. He can only squeeze in a 7:00am call before he embarks on a long day of roadshow shmoozing to build the right investor base for the listing.
The firm this week announced it had slapped an £851m pricetag on the firm – a more specific value than the traditional range given to the market – and said it has been “pleased with the investor engagement” so far.
City A.M. has also learned that CAB has ramped up its portion of free float shares, those that will be traded freely by public investors, beyond the minimum ten per cent to up to 40 per cent in anticipation of demand.
Glass half full
It is a bolshy move in a market that has been nothing but gloomy of late. But “bullishness” is a term that comes up repeatedly from Trivedi.
As the firm prepares to step out into a turbulent and rather dangerous looking public market, Trivedi says that dose of optimism is exactly what is needed.
“I’ve always been a glass half full kind of guy,” he adds.