Following accounting scandal, Wirecard sells ops in Brazil to PagSeguro

Contxto – Following a scandal of tampered accounting books, the dismantling of German Wirecard’s global operations has begun.

Today (21) fintech company PagSeguro announced it acquired Wirecard’s operations in Brazil for an undisclosed amount. 

The parties now await approval from the Central Bank and antitrust authorities.

Wirecard’s woes

For the sake of adding some background, earlier this year, Wirecard—a company that offers payment processing and financial solutions—faced a scandal of major proportions.

Following an intense auditing process, last June it was revealed that €1.9 billion (~US$2.2 billion) were “missing” from its books. Things quickly escalated from there. 

Its shares plummeted, its CEO resigned, and the company ultimately filed for insolvency.

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Auditors concluded that Wirecard was involved in a complex fraud scheme.

In its search for liquidity to keep operating, work is underway to sell many of its foreign operations. It’s signed off Brazil and it’s also selling its branches in Great Britain and North America, according to Reuters.

A bargain for PagSeguro?

For PagSeguro the acquisition will bring on multiple benefits. For one, it will offer more extensive payment options and a better experience for its customers thanks to Wirecard’s end-to-end solutions.

Likewise, it will lead to larger payment volumes. According to Startups, Wirecard has a processing volume of R$5 billion (~US$892 million) and revenue for R$120 million (~US$21 million).

And while no official statement has been made as to the value of the transaction, it’s speculated that it was worth around R$400 million (~US$71 million).

Thus, if these numbers are accurate… it sounds like it was a sweet deal for PagSeguro.

A lesson to be learned

The Wirecard scandal shuttered fintech ecosystems everywhere and shows that even in our modern era, misdeeds can and will happen. In light of these events, authorities everywhere will strive to be more diligent. 

Correspondingly, startups and companies should answer the call to keep their books in order and keep ethics as a top priority within their organizations.

Related articles: Tech and startups from Brazil!

-ML