Oscar Wong | Moment |
Company: International Money Express (IMXI)
Business: International Money Express is an omnichannel money transfer services company. IMXI offers digital money transfer services through a network of agent merchants in the United States, Canada, Spain, Italy and Germany. It operates through company-owned stores, its mobile application and the company's websites. Its remittance services include a range of additional financial processing solutions and payment services available in all 50 states of the United States, Puerto Rico and 13 provinces of Canada. It offers money transfer services to countries in Latin America and the Caribbean, primarily Mexico and Guatemala. These services involve the movement of funds on behalf of a consumer who initiates the transfer, for receipt by a specific recipient at a specific receiving location.
Market value: $601.9 million ($18.46 per share)
Stock chart symbolStock chart symbol
IMXI’s performance in 2024
Activist: Voss Capital
Percentage ownership: 5.64%
Average costs: $19.14
Comment from an activist: Voss is a hedge fund based in Houston, Texas that focuses on underappreciated special situations. They are not traditional activists, but have used activism as a tool in the past.
What happens
Voss has discussed with the Company's Board of Directors and management options to maximize shareholder value, including a possible sale of the Company in a privatization transaction.
Behind the scenes
International Money Express is a money transfer service provider that 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 offers its services through a network of authorized agents in various unaffiliated retail stores, 118 company-owned stores and digitally through an app and its website. IMXI serves more than 4 million customers each month and aims to connect families across borders and ensure financial services are accessible to those who need them most. The company has approximately 20% market share in the top five Latin American and Caribbean (LAC) markets and continuously seeks to expand into new markets. For example, IMXI recently acquired 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 remittance capabilities from Spain, Italy and Germany. Additionally, the company acquired a money services business in the UK in 2024, giving the company the ability to process outbound remittances from the UK.
This is not an opportunistic activist commitment for Voss. The company had first reported holding IMXI in its Q2 2021 13F filing when the company was trading at around $15 per share and has held the stock since then. Now, on September 5, 2024, Voss filed a 13D filing and reported a 5.64% ownership at an average price of $19.14 per share, having purchased shares for as much as $20.09 over the past 60 days.
In its 13D filing, the company states, among other things, that it has communicated with IMXI's board and management regarding a potential sale of the company in a take-private deal. Voss is not the only actively engaged shareholder calling for a sale. A day before Voss' 13D filing, Breach Inlet Capital Management sent a public letter to IMXI's board urging it to undertake a review of strategic alternatives that include a potential sale of the company. Breach Inlet claims that despite solid operating performance and an increase in adjusted earnings before interest, taxes, depreciation and amortization of more than 2.5x since its IPO six years ago, the company remains undervalued in the public markets. IMXI trades at less than 5 times trailing 12-month adjusted EBITDA, while its partner, remittance service provider MoneyGram, was acquired by private equity firm Madison Dearborn last June for about 8 times adjusted EBITDA. Breach Inlet says IMXI should be valued at a premium to MoneyGram, not a significant discount, but a mere equal valuation would imply a price of about $30 per share.
Providing global remittance services is a highly fragmented market, with no single company having more than 20% market share. Accordingly, IMXI could see consolidation opportunities with a strategic buyer like Western Union, which also trades at a premium to IMXI. If IMXI remains independent, its growth plan to expand into digital and European markets would require heavy investments in personnel and resources, sacrificing short-term performance for long-term growth. This is not the kind of plan that will play well in the public markets. Instead, IMXI could be a great company to acquire by a private equity firm that can support the company's growth plan while shielding it from the public markets that have not fully valued it. It doesn't take a genius to see the appeal of such a company to private equity: one private equity firm bought it in 2007 and another in 2017.
This is not the first time Voss has advocated for a strategic review of a portfolio company. In his 13D filing on Benefytt Technologies, filed in December 2019 when the stock was trading at about $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 August 31, 2020, for $31 per share. Most recently, Voss called for a strategic review at Griffon, which the company undertook and ultimately completed, deciding to remain independent. Despite this, Griffon was a highly successful activist campaign for Voss, with the company winning board seats and generating a 139.21% return on its 13D filing, versus 1.28% for the Russell 2000 over the same period.
We firmly believe that modern shareholder activism is a strategy that delivers great value to shareholders. We believe the best type of shareholder activism involves activists coming in with a detailed, long-term plan to create value, with a board seat being a big plus. The other side of the spectrum is shorter-term “sell the company” activism, which is often great for the investor but puts the long-term shareholder at a disadvantage. In these situations, we like to see a longer-term “Plan A” with a sale as a last resort or a detailed analysis of why the company cannot or should not continue as a standalone public company. While Voss offers neither, the company has high credibility as a long-term investor (owner since 2021) that has not made its recommendations to management public to date. Therefore, we believe Voss's intentions here are honorable and the company is doing what it believes is best for both short-term and long-term shareholders.
If IMXI does not implement a strategic plan, Voss will likely consider nominating directors. While a proxy fight is not likely part of its current plan, the company has been successful in gaining a board seat in past campaigns. Voss is not shy about bringing a proxy fight to the vote. At Griffon, the company ran a successful proxy fight, winning a board seat for one of its two director candidates at the 2022 annual meeting and later being able to settle for another board seat. There are two directors up for election at the 2025 annual meeting, and the nomination window opens on February 21, 2025. If a proxy fight does occur, there are several factors that could work in Voss' favor, including the company's low stock price. There have also been signs of shareholder discontent, including the approximately 31% abstentions against lead independent director Michael Purcell at the 2024 annual meeting.
Ken Squire is founder and president of 13D Monitor, an institutional research service on shareholder activism, and founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of 13D activist investments.