Prospective purchasers face both advantages and obstacles in considering Intermex's possible acquisition
Intermex Explores Potential Sale Amid Digital Remittance Market Growth
Intermex, a leading remittances company focusing on Latin America, has announced it is exploring a potential sale during its Q3 2024 earnings. The move aims to optimize growth and better fulfill Intermex's potential as an industry-leading fintech.
The digital remittance market, valued at USD 27.47 billion in 2024, is expected to almost quadruple to USD 98.86 billion by 2032 with a CAGR of 17.4%. Latin America, including Mexico, remains a critical remittance corridor supported by high demand from expatriates in the U.S. and other countries for sending money home.
Intermex is seeing strong growth and profitable margins in digital operations but requires further investment to maximize this. The company retains a powerful market share in key US to Latin America corridors but has minimal presence beyond these markets, making expansion beyond its current markets a significant investment.
Growth Opportunities for Intermex
The company's growth opportunities are tied to the expanding digital remittance market and its established market presence. Key growth areas include:
- Digital adoption and mobile penetration: Increasing smartphone usage and government support for digital financial services in Latin America enhance Intermex’s potential to expand digital money transfers.
- Market expansion via digital channels: The fastest growth is expected in the money transfer operators segment, which Intermex serves, allowing potential expansion and innovation in cost-efficient, seamless cross-border transfers.
- Increasing remittance inflows: Mexico continues to receive high remittance volumes from the U.S. and Canada, positioning Intermex well to capitalize on existing corridors with a strong customer base satisfied by competing providers such as Western Union.
- Competitive cost structure: Offering lower-cost digital remittance options compared to traditional channels creates a competitive edge as users seek affordable sending methods.
- Integration with digital payment protocols: While not explicitly stated for Intermex, the industry trend includes partnerships with technologies like Ripple Labs to enable faster cross-border payments, a potential area of technological enhancement or differentiation.
Potential Buyer Profile
Strategic buyers in the fintech and payments industries, large global or regional money transfer companies, financial institutions and banks, private equity and investment firms, and telecommunications and mobile wallet companies are potential suitors. These entities seek to expand their Latin American footprint and digital capabilities, deepen cross-border payment services, or integrate remittance services into their ecosystems.
The potential sale process is being supported by FTP Securities (investment bank FT Partners). However, it is important to note that the sale is not guaranteed at this time. A move to becoming a privately held company, like MoneyGram's 2022 acquisition by Madison Dearborn Partners, may allow Intermex to break out from its cycles of sluggish growth and commit serious investment to stepping up the company's presence and reach.
[1] Remittance Market Report [2] Latin American Remittances Report [3] Intermex Earnings Report [4] Intermex Platform Usage Demonstration [5] Ripple Labs Partnerships
- To capitalize on the growing digital remittance market, Intermex could potentially attract investors who are interested in expanding their business operations in Latin America, thus enabling Intermex to increase investment in digital operations and enhance its market presence.
- As the remittance market is projected to quadruple by 2032, a strategic buyer looking to deepen cross-border payment services or integrate remittance services into their existing ecosystem may find Intermex appealing due to its established market presence and competitive cost structure in the digital remittance sector.
