MOGO EXPANDS REACH INTO THE BUSINESS-TO-BUSINESS PAYMENTS MARKET.

TORONTO • Mogo Finance Technology Inc., a Vancouver- based company backed by former Dragons’ Den investor Michael Wekerle, is buying digital payments firm Carta Solutions Holding

Corp. in a bid to expand its reach into the business- to- business payments market, the companies said Tuesday.

The all- stock deal valued at $24.2 million will see Mogo acquire 100 per cent of the outstanding shares of Toronto- based Carta in exchange for the issuance of 10 million common shares.

For Mogo, which had its initial public offering five years ago as an online lender, the move is a bet on the multitrillion- dollar global B2B business payments space, co- founder, president and chief financial officer Greg Feller said by phone.

“The Carta acquisition brings deep payment technology, experience and a platform directly in- house with Mogo, so it really catalyzes this transition of Mogo into a digital wallet and digital payments business,” Feller said. “Carta is a global business that’s going to be launching into the U. S. later this year so that significantly increases our addressable market.”

Also known as Carta Worldwide, Carta’s technology processes some 100 card programs in Europe, Asia and Canada, generating $8.5 million in 2019 revenue, with 85 per cent of that outside of Canada, Feller said. One of its key clients is London, U.k.-based tech unicorn Transferwise, he said.

Mogo shares gained 17 per cent to close Tuesday at $2.83 on the TSX.

Feller began the fintech company with his twin brother, Dave, with a goal of disrupting Canada’s major banks with financial services on apps. Besides loans, its consumer- focused products include a Visa Platinum Prepaid Card featuring automatic carbon offsetting, free identity fraud protection and credit scoring as well as ways to invest in the burgeoning area of Bitcoin, the CFO said.

Mogo’s largest shareholder at 18.6 per cent is Wekerle, who also counts the remodelling of the legendary El Mocambo club in Toronto as one of his ventures.

Postmedia Network, which owns Financial Post, holds equity warrants in Mogo as part of a business collaboration.

The common shares produced by the Carta takeover will go into a limited partnership that will not begin to be distributed to current Carta shareholders until December 2021 or earlier if the 10- day volume- weighted average price of Mogo shares on the TSX equals or exceeds $7.45 per share, the firms said.

On a pro forma basis, Carta shareholders will own approximately 18 per cent of Mogo’s fully diluted shares, they said.

“By using Carta’s payment processing engine, we expect to enhance Mogo’s digital wallet capabilities,” Feller said in a statement.