Mercury exits Australia's MessageMedia via $1.3b trade sale

Sinch, a global cloud communications business specializing in mobile customer engagement, will pay $1.1 billion in cash and the rest in shares. Mercury is a minority shareholder in MessageMedia, having reportedly acquired a 30% interest in 2018 at a valuation of A$250 million ($194 million). The firm made the commitment via its second and third funds.

MessageMedia is Australia’s largest provider of B2C messaging services for small and medium-sized enterprises (SMEs). It is also active in New Zealand, the US, and Europe. The company was founded in 2000 by Grant Rule, Justin Lau, and Regina Hill to capitalize on the potential of SMS-based marketing. It has grown organically and through nine bolt-on acquisitions, most recently SimpleTexting in the US.

Melbourne-headquartered MessageMedia now offers a web-based software-as-a-service (SaaS) suite that facilitates two-way messaging without any need for coding or familiarity with application programing interfaces (APIs). It serves over 60,000 customers and handles more than five billion mobile messages per year. Multiple brands can leverage the same underlying technology platform and there are pre-configured integrations to leading cloud platforms such as Shopify, NetSuite and HubSpot.

Citing third-party analysis, Sinch claims the global turnkey consumer engagement solutions market is worth $9-13 billion per year, of which 50-70% is driven by SMEs. It is expected to expand by 25-30% per annum through 2024, with especially strong growth in the US. MessageMedia is already adding 1,500 new customers in the US every month.

The company’s projected revenue for the 12 months ending June is $151 million, with gross profit of $94 million and adjusted EBITDA of $51 million. This corresponds to a gross margin of 63% and an EBITDA margin of 34%, according to a statement.

“Mobile messaging delivers tremendous ROI [return on investment] but smaller businesses often lack tools that cater to their specific needs,” said Paul Perrett, CEO of MessageMedia. “Serving these customers presents a tremendous opportunity, and with Sinch we can build a global leader in our field.”

Sinch believes the acquisition will deepen its penetration of the SME space. The company expects MessageMedia to benefit from its direct connections to more than 450 mobile operators and investments in conversational messaging channels like WhatsApp, Viber, RCS, and Instagram. This will be Sinch’s 10th bolt-on in the last three years and its fifth since the start of 2020.

Mercury is currently deploying its third fund, which closed in 2018 at the hard cap of A$600 million, up from A$300 million in the previous vintage. Recent investments include Green Options, a landscape and sports turf maintenance services provider. Among the notable Fund II exits are Nexus Day Hospitals, which was sold to QIC in late 2019, generating a 3.5x multiple and a 44.3% IRR.

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• Topics
• Australasia
• Trade sale
• Technology
• Media
• Europe
• Australia
• Mercury Capital
• TMT