What? Global investment management company Henderson Group plc (ASX: HGG) on Wednesday morning announced an increase in its shareholding of one Australian small cap with links to global credit giant Mastercard Ltd.
The company in question has a joint venture with Mastercard to bring cheaper banking services to the 2 billion people in the world without a bank account, but in the last month has lost its CEO and seen its shares plunge from 58 cents to just 26 cents.
The company in question is, of course, out of favour mobile money company eServGlobal Limited (ASX: ESV).
So What? Henderson announced that it had increased its share in eServ from 15.52% to 17.51% in April, taking its total shareholding to 46.5 million shares, currently worth $14.65 million. eServ's shares jumped 11% to 31.5 cents as investors took Henderson's interest in the company as a positive following months of downward price action.
The tumbling share price has been a response to the sudden departure of former CEO Paolo Montessori, the fairly rapid appointment of non-executive director John Conoley into the executive chairman role, and the downgrade in full-year guidance from 20% revenue growth to only 10%.
What Now? eServ has a massive opportunity to break into the global remittance industry between developing nations that touches an estimated 2 billion people. eServ's plan is to generate revenue by clipping the ticket as money is transferred between international bank accounts to the tune of around 1.5% of the total amount.
The market is currently dominated by Western Union and MoneyGram, but eServ's HomeSend platform can cut the transfer cost of the transferred amount down, a massive benefit for those transferring money back to their families in other countries.
Sadly eServ's success is far from guaranteed, however a large move in the share price could come swiftly if Western Union joins MoneyGram in joining up to HomeSend or substantial progress is made by the joint venture partners in improving transfer volumes.
Similar to other small and high-risk financial-technology companies, eServ is suffering from a lack of positive news flow and will be punished if there's a selloff in the broader market.
