Wirecard Australia, NZ selloff gets underway

An auction for scandal-plagued Wirecard’s Australian and NZ operations is set to start next week as local customers scramble to distance themselves from the group.

The corporate headquarters of bankrupt German financial transactions provider Wirecard. Picture: Getty Images

Wirecard’s Australian and New Zealand entities are quietly kicking off a sales process with documentation expected to land next week, as its scandal-plagued German parent navigates a fraud and insolvency process.

The Australian understands investment bank Moelis has been aiding Wirecard’s local payments operations to field some inbound interest, with a more formal auction set to start next week inclusive of more detailed domestic information.

Among the potential suitors are Nasdaq-listed Fiserv and European payments group Worldline, although sources suggested Wirecard’s Australian and NZ entities could still be tipped into voluntary administration if a buyer wasn’t secured. The preference is to offload the three entities as a group, although Wirecard is leaving the option of selling the Australian and NZ operations in pieces if required.

A Fiserv spokeswoman declined to comment on interest in Wirecard’s Australian and NZ businesses and Worldline representatives also wouldn’t comment.

The local Wirecard sale process also has implications for a number of local banks and payments groups that draw on its transaction processing, pre-paid cards or technology and software licence service.

Sources said some Australian Wirecard customers were scrambling to ring-fence their operations from the embattled group, including attempting to obtain source software code for card management systems.

Westpac is said to have a small exposure to Wirecard, although not via lending, Bendigo and Adelaide Bank runs the German group’s products but on its own internal systems, and payments group Cuscal counts Wirecard as a third-party provider.

Industry superannuation fund-owned bank ME has said its customers won’t be impacted by the Wirecard issues, even though it uses third-party software licensed from a NZ company that was acquired by the German group.

An issue for any potential buyer of the Australian and NZ Wirecard operations is likely to be the costs to redevelop its platforms.

The preliminary insolvency administrator of Wirecard globally, of law firm JAFFÉ Rechtsanwälte Insolvenzverwalter, this week said more than 100 parties had registered interest for the group’s business divisions around the world.

Wirecard’s parent entity spectacularly collapsed last month - applying for insolvency for a spate of entities - largely due to alleged fraud and a missing 1.9 billion euros which was meant to be in trust accounts. The insolvency proceedings did not include three entities across Australia and New Zealand, which house about 70 employees, technology and card platforms and as many as 1000 Eftpos machines. The Wirecard scandal rocked markets and entangled several international executives. After chief executive Markus Braun was arrested and released on bail, this week the head of a Dubai-based Wirecard subsidiary faced questioning and arrest by German authorities. Overseas reports have said prosecutors are also investigating Wirecard’s finance chief Alexander von Knoop, product executive Susanne Steidl and operating boss Jan Marsalek.

The Australian last week revealed the resignation of Wirecard’s Australia and New Zealand boss Karl Mohan, who is staying on to serve a three-month notice period. Mr Mohan joined the group just a year ago and became head of Australia and NZ in January.

Wirecard operates two entities domestically Wirecard Australia, which doesn’t lodge financial accounts, and Wirecard Australia A&I.

Accounts lodged with the corporate regulator for Wirecard Australia A&I – which issues prepaid cards, undertakes transaction acquiring and payment services – showed losses for 2019 of $6m, narrowing from $14.6m in 2018. Sources said that entity did not rely on bank funding, but the accounts showed it was propped up by a $10m capital raising in May, with the parent entity providing “necessary financial support” because total liabilities exceeded assets.

Australian staff are receiving briefings.