Brazilian acquisition primes Moneycorp as key fx provider in South American markets

iStock 000024703872XSmallBack in August, leading foreign exchange provider moneycorp signed an agreement to acquire a minority stake in Novo Mundo Corretora de Câmbio, a fast-growing Brazilian foreign exchange business with a 15 year heritage in international payments and retail FX.  

The investment is the latest step in moneycorp’s global expansion strategy, which has already seen the business establish offices in Spain, France, Ireland and the US to service increasing demand for international payments flows between these countries and the UK, as well as globally. 

Mark Horgan, CEO of moneycorp, said of the deal: “Acquiring a stake in Novo Mundo is part of moneycorp’s long-term international expansion strategy, which is focused on establishing a foothold in markets that offer solid and sustainable growth opportunities both now and in the future.  

“Novo Mundo has been an excellent commercial partner to moneycorp for more than two years, so the investment was a natural next step in solidifying and growing moneycorp’s presence in the South American market, where we see huge opportunity for specialist FX services based on competitive pricing, expert teams and fast, efficient systems.” 

Establishing a foothold in Brazil will enable moneycorp to take advantage of significant growth opportunities within the country and across South America, from corporate and private clients within buoyant property and import-export markets. 

Although present in a number of countries outside the UK, this marks the company's first overseas purchase, and Mark expects it will take one to two years before Moneycorp is able to acquire the entire business.

 

“We’ve been looking at Brazil since 2009, and sourcing a clean, well-managed Brazilian foreign exchange house is quite a difficult task – you’ve got to be careful about your own reputation,” he said.

 

“We’re taking a very long-term view in Brazil. The country’s population is due to double over the next 35 years, its economy is the eighthbiggest in the world, and its trade corridors are north-south with North America, and also with Asia.  Its economy has soya, beef, farming and, in future, gas, so in the long-term it should have good cross-border flow dynamics.”

 

As much as 96pc of the foreign exchange market in Brazil is in the hands of banks, the firm believes, and Mr Horgan expects Moneycorp will be able to undercut the institutions on priceand on service, with its specialised offering.   

 

 

Under Brazilian law, foreign finance firms cannot acquire 100pc of a domestic business up front.  Instead, they must invest in a minority stake before proving themselves to the central bank. 

 

 

Tight controls onforeign currencytransfers mean customers sending even tiny sums abroad have to report the trade to the central bank.  They also have to provide the central bank with tax and identity documents, making it a costly and arduous process for firms offering the service. 

However, Mark remains optimistic that their new 45pc purchase of Novo Mundo Corretora de Câmbio will act as a catalyst for the company’s ongoing global expansion.

 “It’s an exciting move for moneycorp, and our appetite for expansion into additional overseas markets will continue into 2016 and beyond.”  

After processing $18bn worth of currency trades over the past year and seeing profits jump 20pc to £60.4m in the first half of 2015, moneycorp has major plans to expand into other countries following their investment in Novo Mundo Corretora de Câmbio, a prospect Mr Horgan is looking forward to.

 

“We like euro-non-euro flow, so if you are in the EU but not inthe Eurozone then you are probably a good target for us as the vast majority of trade goes into the Eurozone.

 

“We like Scandinavia, which has a lot of cross-euro business.  Canadian-US trade is also strong.  We also like Latin America, but we have not really interrogated Asia at this point, even though we know there is good Asian business to be had if we get that far.”

 

Headquartered in São Paolo, with offices in Curitiba, Rio de Janeiro and Salvador, Novo Mundo Corretora de Câmbio currently employs 75 staff.  The business offers international payments, foreign exchange, bank notes and MasterCard currency card services and has seen strong and steady growth, with a 332% increase in turnover in the last five years.  It will be well placed to increase its share of the Brazilian FX market with moneycorp’s involvement. 

Moneycorp has partnered with Major Events International to provide bespoke support for MEI members who have international payment requirements. If your business makes any transactions in foreign currency, whether exporting goods, being paid for services, or purchasing within a supply chain, contact the dedicated moneycorp lead for MEI Members, Katie Woods, on 020 3823 0251 or email This email address is being protected from spambots. You need JavaScript enabled to view it. .

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