Big four bank rumoured to be running the ruler over Tyro Payments

In recent weeks, there have been some murmurings that one of the banks has been considering a purchase of Tyro Payments.

It’s one thing to consider buying a business, but following through is quite another, and most are betting on a purchase by private equity being more likely.

Yet the logic for a bank to take a look Tyro is that the big four banks need to stay ahead of the curve when it comes to payments technology.

ANZ has already launched a partnership with payments provider Worldline, and a logical group to look at Tyro is NAB, given that it has the biggest share of the country’s business banking market.

NAB wants to get bigger in small business, and a payment technology business provides the opportunity to collect customer data while also gaining the soft technology that sits behind the payments business that it needs for transactions.

The deterrent in buying Tyro, though, is that technology is changing rapidly and Tyro’s payment machines are now in competition with more sophisticated technology provided by groups like Square.

But whether a sale of Tyro happens at all – by a bank or a fund – is becoming doubtful depending on who you speak to.

DataRoom understands that some investors are prepared to sell out of the stock at $1.50 per share, but the offer that Tyro’s board last month rejected was well below that at $1.27 per share Potentia Capital’s $658m bid was a far cry from the $1.36bn value Tyro listed at.

For private equity investors to sweeten any deal in the current market, it’s a big call.

The macroeconomic conditions are getting ugly and a consequence is that there could be a funding freeze amid the jitters and rising interest rates.

Based on this, the stock will only get cheaper, and fund investors are unlikely to want their money managers to launch big deals in such uncertain times.

Tyro’s shares on Tuesday closed at $1.32, which indicates some believe another offer is on its way.

There have also been suggestions that outgoing boss Robbie Cooke is there to see the business sold – he resigned to head Star Entertainment effective October 3 but will stay on until December 31 to ensure a seamless transition to new boss Jonathan Davey.

Putting it in context, Potentia’s offer was 29 per cent higher than Tyro’s 30-day volume weighted average share price of 99c.

The largest shareholder, Atlassian co-founder Mike Cannon-Brookes, agreed to deal his 12.5 per cent stake, which he owns through his private company Grok Ventures, to Potentia, backed by former MYOB boss Tim Reed and ex-Archer Capital executives.

Analysts at Morgan Stanley had suggested an offer of between $2 and $2.50 per share is the going rate for similar companies, which suggests the board probably won’t budge on its current stance.

Shareholders bought in at $2.75 per share for the initial public offering in 2019, but some now want to cut their losses.