A new way to invest in the online payments business is emerging with Foley Trasimene Acquisition II (NYSE:BFT) and shares of BFT stock.
The focus, for now, is on Foley Trasimene Acquisition’s latest chapter.
But the excitement is coming from the company’s soon-to-be-partner, Paysafe, and its major role in digital financial transactions from games like Fortnight to online sports betting.
Investors interested in this segment of the market should consider BFT stock.
The Limited Lifespan of BFT Stock
As its name suggests, Foley Trasimene Acquisition II is a special purpose acquisition company, or SPAC for short. As a SPAC, the company has a limited lifespan. It must find a private partner looking for go public, then merge by a deadline.
The buzz about BFT stock comes from the proposed partner: Paysafe, an integrated payment platform.
After Foley Trasimene and Paysafe finish the reverse merger, the SPAC disappears. Paysafe will remain and be traded under the ticker PSFE. The deal is slated to be completed in the first half of 2021.
Foley Trasimene says the deal has an estimated $9 billion pro-forma value enterprise value.
Meanwhile, investors can buy BFT stock prior to the merger.
A Look at Paysafe
Foley Trasimene’s founder and chairman William P. Foley II describes Paysafe as “our ideal partner” for his SPAC.
“We believe we can further enhance Paysafe’s growth trajectory through accelerated operational transformation and M&A, enabled by our de-levered balanced sheet,” he said.
Paysafe, based in the UK, provides businesses and consumers with payment processing, digital wallet and online cash services.
The company has provided online payment services for two decades that in 2019 totaled some $98 billion. More specifically, Paysafe handles 70 different types of payments in more than 40 currencies.
Paysafe’s operating brands include Skrill, Paysafecard and Income Access. In gaming circles, Paysafe provides services to Twitch, Fortnite, bet365, betfair, William Hill and DraftKings (NASDAQ:DKNG).
William White, a writer at InvestorPlace, recently reported that the newly formed company Paysafe Limited will receive $150 million cash from Foley Trasimene and $2 billion from private investors.
Paysafe, Foley said, “has significant long-term growth potential.”
BFT Shares Surge
Shares of BFT stock rose swiftly once the deal between Foley Trasimene and Paysafe was announced. Considering the details, the increase is not surprising.
Prior to the announcement, shares were trading around $10. The price spiked to about $17 per share, then declined to around $15 a month later.
In his article, White said more than 51 million shares of BFT stock were traded on the day the merger agreement was announced.
“That’s a massive spike compared to Foley Trasimene Acquisition II’s daily average trading volume of about 76,000 shares,” he wrote on Dec. 7, 2020.
My InvestorPlace colleague Mark Hake says Paysafe charges a handling fee of 1.56% and is “very profitable.”
According to documents filed by the company, Paysafe forecasts adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, in 2020 of $420 million. That figure is expected to reach $669 million by 2023.
Hake is an excellent numbers man, and his math-based assertions are compelling. Citing Paysafe’s performance, he estimates the value of BFT stock is 40% more than its current price.
The Bottom Line
Foley Trasimene is a publicly-traded SPAC that is slated to merge with digital payment company Paysafe of the United Kingdom.
Once the merger closes sometime in the first half of 2021, Foley Trasimene will disappear. The resulting company named Paysafe Limited will trade on the New York Stock Exchange under the PSFE ticker.
Until then, investors can play Foley Trasimene by trading shares of BFT stock.
Bear in mind that BFT stock surged from $10 to $15 during the month since the proposed merger was announced. However, several observers think well of the stock thanks to its growth prospects after the merger.
Investing in SPACs involves an amount of speculation and heightened risk. However, BFT stock is a buy for investors comfortable with these conditions and looking for exposure to e-commerce.
On the date of publication, Larry Sullivan did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Larry Sullivan is a veteran journalist in Florida who has covered banking and finance for several years. He is a former investing editor at U.S. News & World Report in Washington D.C. and began writing for InvestorPlace in 2020.