The recent acquisition of HUMO by Paynet for $65 mn marks a pivotal moment for Uzbekistan’s fintech industry. Financial analyst, Zakhro Murtazaeva, at AVESTA shared insights into the significance of the deal, its implications for the market, and what it means for the broader privatization efforts in the country.
Collaboration Over Consolidation
“The acquisition of HUMO by Paynet is less about merging operations and more about leveraging each other’s strengths to improve services,” Murtazaeva explained. “Paynet, already ranked second in transaction volume with HUMO cards, can now access HUMO’s infrastructure and data. This opens the door for more personalized services and innovations in payment solutions.”
With HUMO’s vast network of 6,400 ATMs and 210,000 terminals and its active user base of 12.69 million cards monthly, the deal positions Paynet to enhance its offerings. “HUMO’s strong regional presence, including partnerships with Kyrgyzstan’s Elkart and Kazakhstan’s Halyk Bank, offers Paynet opportunities to expand its influence regionally, strengthening its role as a key player in the evolving fintech ecosystem,” Murtazaeva added.
Why Paynet Paid Above Valuation
Paynet’s $65 million bid exceeded valuations by Deloitte and KPMG, which Murtazaeva attributed to strategic benefits. “HUMO’s infrastructure and profitability made it an attractive asset,” she said. “With 42.5% profit growth in the first nine months of 2024, the company provides a solid foundation for future growth. Additionally, the potential for tariff increases could further boost profitability.”
Financially, HUMO was valued at a P/E multiplier of 5.6x and a P/B of 2.6x. “Compared to the Payme-TBC deal, which had a P/E multiplier exceeding 10x, HUMO seems undervalued given its scale and infrastructure,” Murtazaeva noted. However, when compared to Uzcard’s valuation of a P/E multiplier of 0.4x, the price aligns with its market position.
Timing and Growth in Digital Payments
The acquisition comes as Uzbekistan and Central Asia experience rapid growth in digital payments. “The timing of this acquisition aligns perfectly with the shift towards cashless transactions in Uzbekistan,” Murtazaeva said. “Paynet is now positioned to capitalize on this momentum while leveraging HUMO’s established infrastructure to strengthen its offerings.”
As neighboring countries also move toward digital economies, the collaboration between Paynet and HUMO could enhance their regional presence. “This partnership allows them to remain competitive in an evolving digital landscape,” Murtazaeva emphasized.
Privatization and Economic Reform
This deal also reflects a broader shift in Uzbekistan’s economic policies. “HUMO’s sale demonstrates the government’s confidence in the private sector’s ability to expand and modernize key industries,” Murtazaeva said. “It follows other high-profile deals like TBC’s acquisition of Payme and the privatization of Ipoteka Bank, signaling that Uzbekistan is opening its economy to local and international investors.”
She highlighted how successful outcomes from the HUMO-Paynet partnership could inspire further privatization efforts. “This acquisition shows how private ownership can unlock value and drive growth in the economy,” she remarked.
Challenges and Transparency Concerns
While optimistic about the potential of the acquisition, Murtazaeva noted potential challenges. “Paynet must maintain HUMO’s core payment system stability while navigating governance and compliance requirements,” she said. “They also face fierce competition from Uzcard and international players like Visa and Mastercard, which will require constant innovation and competitive pricing.”
The deal’s closed-door nature raised questions about transparency. “While this aligns with practices in transitioning economies, it creates skepticism among the public and investors,” Murtazaeva acknowledged. “Uzbekistan would benefit from greater transparency in privatization efforts to build trust and encourage wider participation from both domestic and international investors.”
Looking Ahead
The HUMO-Paynet deal underscores Uzbekistan’s growing digital economy and the attractiveness of its fintech sector to investors. “Uzbekistan’s rapid market growth and untapped potential make it likely that more foreign fintech companies will explore similar acquisition opportunities,” Murtazaeva predicted.
However, concerns about data security, as seen in prior discussions about Kaspi’s interest in HUMO, may influence how foreign players approach investments. “Overall, the market’s trajectory points to a bright future for fintech in Uzbekistan,” Murtazaeva concluded.
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