Voss Capital desires to maximise worth at International Money Express

Business: International Money Express is an omnichannel money remittance services company. IMXI offers money transfer services digitally through a network of agent retailers in the United States, Canada, Spain, Italy and Germany. It works through company-operated stores, its mobile application and the company’s websites. Its remittance services include a suite of ancillary financial processing solutions and payment services available in all 50 states in the United States, Puerto Rico and 13 provinces in Canada. It offers money remittance services to Latin America and the Caribbean countries, mainly Mexico and Guatemala. These services involve the movement of funds on behalf of an originating consumer for receipt by a designated beneficiary at a designated receiving location.

Stock Market Value: $601.9M ($18.46 per share)

Voss has engaged with the company’s board and management team regarding ways to maximize shareholder value, including a possible sale of the company in a take-private transaction.

International Money Express is a money remittance services provider which enables consumers to send money from the United States, Canada, Spain, Italy and Germany to Mexico, Guatemala and other countries in Latin America, Africa and Asia. The company provides its services through a network of authorized agents located in various unaffiliated retail establishments, 118 company-operated stores and digitally via an app and its website. IMXI serves more than 4 million clients every month and has a goal of connecting families across borders, ensuring financial services are accessible to those who need them most. The company has roughly 20% market share in the top five Latin America and the Caribbean (LAC) markets and has been continually seeking expansion into new markets. For example, IMXI has made recent acquisitions of La Nacional in 2022, which has a strong market position in remittances to the Dominican Republic and other LAC countries. The company also acquired I-Transfer in 2023, which established outbound remittances capabilities from Spain, Italy and Germany. It also snapped up a money services entity in the United Kingdom in 2024, which will give the company the opportunity to provide outbound remittances from the UK.

This is not an opportunistic activist engagement for Voss. The firm initially reported holding IMXI in its Q2 2021 13F filing when the company was trading around $15 per share and it has held the stock ever since. Now, on Sept. 5, 2024, Voss filed a 13D and reported 5.64% ownership at an average cost of $19.14 per share, purchasing shares as high as $20.09 in the past 60 days.

One of the things the firm states in its 13D is that it has engaged in communications with the board and management of IMXI regarding a potential sale of the company in a take-private transaction. Voss is not the only actively engaged shareholder in the stock calling for a sale. A day prior to Voss’s 13D, Breach Inlet Capital Management sent a public letter to the board of IMXI, urging them to pursue a review of strategic alternatives that includes a potential sale of the company. Breach Inlet asserts that, despite solid operating performance and increasing adjusted earnings before interest, taxes, depreciation and amortization by over 2.5-times since going public six years ago, the company remains undervalued by the public markets. IMXI trades at under 5-times the last 12 months’ adjusted EBITDA while its peer remittances service provider MoneyGram was acquired by private equity firm Madison Dearborn for approximately 8-times adjusted EBITDA last June. Breach Inlet thinks that IMXI should be valued at a premium to MoneyGram, not a material discount, but just an equal valuation would imply a roughly $30 per share price.

Global remittances service provision is a highly fragmented market with no single company commanding greater than 20% market share. Accordingly, there could be consolidation opportunities for IMXI with a strategic acquirer like Western Union, which also trades at a premium to IMXI. If IMXI stays independent, its growth plan of expansion into the digital and European markets would require heavy investment in people and resources, sacrificing short-term performance for long term growth. This is not the type of plan that plays well in the public markets. Instead, IMXI could be a great business to be acquired by a private equity firm that can help facilitate the company’s growth plan while shielding it from the public markets, which have failed to fully value the company. You do not need to be a genius to see the allure of a company like this to private equity: A private equity firm bought it in 2007 and another one again in 2017. 

This is not the first time Voss is advocating for a strategic review at a portfolio company. In its 13D on Benefytt Technologies, filed in December 2019 when the stock was trading at roughly $14 per share, Voss highlighted the strategic opportunities at Benefytt and the active M&A environment in the company’s space. Benefytt was acquired by Madison Dearborn Partners on Aug. 31, 2020 for $31 per share. Most recently, at Griffon, Voss called for a strategic review, which the company undertook and ultimately concluded, determining to stay independent. Despite this, Griffon was a highly successful activist campaign for Voss where the firm gained board seats and made a 139.21% return on its 13D versus 1.28% for the Russell 2000 over the same period.

We strongly believe that modern day shareholder activism is a strategy that greatly benefits shareholders. We believe the best type of shareholder activism involves activists who come in with a detailed, long-term plan to create value, with a board seat being a huge plus. The other side of the spectrum is shorter-term “sell the company” activism that is often great for the investor but shortchanges the long-term shareholder. In those situations, we like to see a longer-term “Plan A” with a sale as a last resort or a detailed analysis on why the company cannot or should not continue as a standalone public company. While Voss does not provide either of these, the firm does have a lot of credibility as a long-term investor (an owner since 2021) who has not been public with its recommendations to management until now. As such, we think Voss’s intentions here are honorable and it’s doing what it thinks is best for both short-term and long-term shareholders.

If the IMXI does not execute on a strategic plan, Voss will likely consider director nominations. While a proxy fight is not likely part of its current plan, the firm has been successful in gaining board representation in previous campaigns. Voss is not afraid to take a proxy fight to a vote. At Griffon, the firm ran a successful proxy fight, winning a board seat for one of its two director nominees at the 2022 annual meeting, and later settling for another board seat. There are two directors up for election at the 2025 annual meeting and the nomination window opens on Feb. 21, 2025. If it comes to a proxy fight there are multiple factors that could work in Voss’s favor, including the company’s depressed stock price. There have also been signs of shareholder discontent, including the roughly 31% withhold votes cast against lead independent director Michael Purcell at the 2024 annual meeting

Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.