IMXI Should Publicly Announce Review of Strategic Alternatives, Including a Private Equity Takeout
We are confident that IMXI would draw significant interest from private equity buyers given the company's growth prospects, low capital intensity, and underleveraged balance sheet. There is an undeniable historical precedent for private equity's interest, as a private equity firm acquired IMXI in 2007 and another private equity firm bought IMXI in 2017. Also as referenced above, a private equity firm recently acquired peer MGI for ~8x EBITDA. IMXI is a much better business than MGI, but conservatively applying 8x to IMXI's LTM EBITDA then implies a takeout price of ~$30 per share and ~65% upside from the current trading price.6
Meanwhile, Remitly Global ("RELY") is an unprofitable Digital remittance company trading for ~2.4x LTM Revenue.7 At this multiple, IMXI would be worth ~$50 per share.8 We do not expect IMXI to receive RELY's valuation in a takeout today. However, RELY's valuation highlights the potential future upside for a private equity buyer if: 1) they acquire IMXI and 2) in the future, they take IMXI public after successfully executing its growth strategy.
In summary, we believe IMXI's Board should immediately publicly announce a review of strategic alternatives. The Board must promptly act by retaining legal and financial advisors to commence this review. If the Board does not make this process public, then IMXI's share price may continue to languish and private equity bids may be anchored to IMXI's currently depressed trading price (leading to less attractive acquisition offers). We believe there are numerous potential private equity buyers willing to pay a substantial premium to IMXI's current share price. We also believe that shareholders would be widely supportive of such a transaction.
