MoneyGram's financial results could impact a potential sale of the company

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  • Remittance giant MoneyGram will likely be for sale soon, according to recent reports
  • The news has been dismissed as a rumour as there has been no announcement from MoneyGram itself
  • The brand has more than 25,000 remittance centres in Africa alone

 

Executives at MoneyGram are assessing the possibility of selling the brand, according to a Reuters report. This information is making its rounds a year after Ant Financial attempted to acquire the remittance giant for a whopping $1.2 billion and after that attempt failed. The brand’s share price fell after the deal collapsed but its value recovered in mid-January this year after rumours circulated that MoneyGram’s management will try to sell again.

MoneyGram recently announced that it will release its financial results for Q4 2018 on February 11th. The conference will be hosted by MoneyGram Chairman and Chief Executive Officer Alex Holmes and Larry Angelilli, its Chief Financial Officer. No announcement of the brand’s plans to sell was discussed in the press release and executives have not confirmed the news.

Despite being one of the most trusted remittance brands in the world and having overseas transfer rates that are often considered better than its direct competitor Western Union, the brand was still in huge trouble in 2018 due to its accumulated debt. By September that year, the remittance giant confirmed a net debt of $903 million. Observers say that this was a rather unfortunate event as the brand was midway through a technological transformation that would have slashed its overhead costs.

By November, the brand took another hit after the US Federal Trade Commission sent it a $125 million bill as settlement for not taking steps to prevent fraudulent transfers.

With over 25,000 remittance centres in Africa alone, MoneyGram is big enough to compete with WU but it was beleaguered by a number of problems. Apart from this, its rates for international money transfers are not as straightforward as that of its rival. Individuals who transfer money internationally on a regular basis through MoneyGram know that sending $500 to Mexico means paying a $9.99 fee. The costs are not the same when sending money to Ireland or China.

Investopedia notes that the brand recently modified its domestic fees. It now costs $11 per transaction if the sender is paying from a bank account online and a whopping $49.99 if a credit or debit card is used and if the amount is between $50 and $900. The brand reportedly charges 2% for amounts over $900. MoneyGram closely matches its competitor’s prices when it comes to domestic transactions.

The brand’s previous attempt to sell collapsed due to regulatory issues. The year before, Alipay’s parent Ant Financial won a bidding war against Euronet. After MoneyGram failed to get clearance from investment authorities, the company walked away from the deal.

It is not yet clear as to what MoneyGram’s plans are and those who know about what is going on have not revealed which company is planning to buy the brand.

 

Find out more about the remittance industry here.

 


Daniel Webber
Daniel Webber
Founder & CEO
Daniel is Founder and CEO at FXcompared and has numerous years of experience in the international finance world, especially within the media, technology and property sectors. Daniel is passionate… Read more

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