Global leader in solutions for cloud communications and mobile customer experience, Sinch, has announced some exciting news. The company recently agreed to purchase ACL Mobile for a cash value of around 5,350 million (INR).
ACL Mobile first launched in 2000 and is a well-known provider of cloud communication services in Southeast Asia and India. The ACL platform helps businesses to interact more effectively with customers through channels like SMS, voice, IP messaging, WhatsApp, and even email. Today, ACL is responsible for over 500 enterprise customers and has gained a great deal of popularity in the financial services industry.
The proprietary Axiom platform from ACL offers granular access controls and intelligent routing solutions that cater to the stringent security requirements of financial groups. Some of the leading institutions relying on ACL technology include the HDFC bank, Kotak, and the ICICI bank. ACL serves customers in a variety of other segments too.
Expanding into a New Environment
According to the CEO of Sinch, Oscar Werner, purchasing ACL means that Sinch can gain a crucial scale in the second-largest mobile market in the world. This acquisition will bring new expertise, technology, and customers to Sinch as the company continues to expand. Over the years, Sinch has forget a powerful strategy to grow the company through organic and non-organic means.
Long-term focus on profitability and cash flow means that Sinch is well placed to continue executing on its strategy, also in times when overall macroeconomic conditions might not be ideal. Currently, India is the world’s largest mobile market with a population of over 1.3 billion. The fast-growing mobile-first economy benefits from a rising demand for smartphones.
Government initiatives and economic growth are also expanding the use of new financial services in India too. Beyond giving Sinch more access to a vast market, the acquisition of ACL will also allow the company to transform its Tier 1 global network even further. Sinch will be able to use ACL’s direct connections to operators in Malaysia, UAE, and India for end-to-end connectivity.
CEO and Founder of ACL Mobile, Sanjay K Goyal, says that with Sinch, the company is quickly scaling up to become one of the leading global players in the industry.
Exciting Opportunities for Both Brands
The purchase of ACL Mobile will massively increase the global scale of Sinch. In the 12 months ending in March 2020, ACL supported the delivery of 47 billion messages. In this period, the company also achieved massive revenues of 4,959 million INR.
Like-for-like gross profit growth in the 12 months that ended on March 2020 was also 13 percent. Although the long-term growth outlook is great now, unusual commercial activity in India means that it’s difficult to predict the future.
The acquisition of ACL Mobile will be supported with the cash that Sinch has at hand, as well as available credit facilities. The price in total is going to be 5,350 million INR, which is about 655 million SEK in the current exchange rate.
The valuation price paid by Sinch indicates that there will be an EV/EBITDA multiple of 11.1times for the twelve-month period that ended in March 2020. This transaction will be structured in two tranches. Initially, Sinch will acquire an 82% claim of the outstanding shares in ACL mobile. During this time, Sinch will also be granted an option to acquire the remaining 18% shares in ACL mobile after December 1st, 2020.
An Interesting Future for Sinch
Sinch also has a financial target to maintain measured on a rolling 12-month basis. After the acquisition of ACL mobile, various announced transactions will also affect Sinch’s ratio. For instance, on April 1st, Sinch closed the purchase of Chatlayer for a price of 6.9 million EUR.
This purchase of ACL Mobile also comes soon after Sinch purchased the Wavy company in March 2020, and the SAP Digital Interconnect company in May.
So many exciting acquisitions in quick succession indicates that Sinch is dedicated to making sure that it achieves its goals when it comes to global expansion and new worldwide opportunities. It will be interesting to see what happens next in the months to come.
The purchase of ACL Mobile is expected to come to a close in the third quarter of 2020, should everything go according to plan. Stay tuned to see whether Sinch snaps up any more companies in the meantime!
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