Nuvei Stock Goes Private: What Now for Investors?

Nuvei (TSX:NVEI) stock is officially going private in a US$6.3 billion all-cash deal. What does this mean for investors?

Amy Legate-Wolfe

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Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband.

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Published April 2, 2024 11:45 am EDT

| More on: NVEI

Shares of payments-technology company Nuvei (TSX:NVEI) were up further this week as news the company is going private hit headlines. Shares of Nuvei stock climbed another 3% on confirmation — a total of 13% since rumours started last week.

A worker uses a double monitor computer screen in an office. — Source: Getty Images

What happened?

Private equity firm Advent International agreed to purchase Nuvei stock for an all-cash deal being valued at US$6.3 billion. The deal will take Nuvei stock private, which will then be delisted from the TSX. This comes just four years after having its initial public offering (IPO).

The offer from Advent comes at a 56% premium for Nuvei stock’s last closing price on the Nasdaq before the acquisition came about. So, there is certainly even more growth that shareholders can bring in during the process.

The acquisition of the Ryan Reynolds-backed company is now expected to close either in late 2024 or by the first quarter of 2025. Meanwhile, those with multiple voting shares will roll over much of their investment. Philip Fayer, chief executive officer (CEO) of Nuvei, Novacap Management, and CDPQ will roll over 95%, 65%, and 75% of their shares, respectively. This will reach and expected US$560 million in cash for the shares sold on closing.

Why Nuvei stock is going private

The big question, of course, is why is Nuvei stock going private in the first place? The company, like many fintech companies, has been facing challenges in maintaining growth amongst so much competition and inflation. Going private will allow the company to cut costs as well as avoid the quarterly reporting requirements that come with being a public company.

Furthermore, the acquisition provides Nuvei stock with access to Advent International’s resources, operational expertise, and investment capacity. This can support the continued development of Nuvei stock as well as its global expansion.

So, after surging during the COVID-19 pandemic, with digital payments gaining popularity, Nuvei stock has shrunk in valuation. Concerns and scrutiny will now likely be a thing of the past, at least by the public. Even so, what should investors do now?

What now?

Following the acquisition, Nuvei stock will continue to be led by its current CEO Philip Fayer and be headquartered in Monreal. The other major shareholders mentioned above will also retain significant ownership of the payment company after going private.

Nuvei stock will then aim to capitalize on emerging opportunities in the payments industry, which will include expanding on a global scale. So, shareholders will need to decide whether they want to stay on board ahead of going private or get out. Shareholders who agree to the acquisition will receive a cash payment for their shares of US$34 per share.

That’s great, but if you’re going to wait around, there are certainly issues that could crop up between now and the exit from the TSX. This might include a loss of transparency and a change to the investment horizon with Advent International involved. Even so, now that the US$34 has been announced, this means that investors are pretty much guaranteed that amount. So, if you’re looking for another boost, now could be the time to get in before the official privatization of the Nuvei stock.