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Ebix & Resonant expand as U.S. federal shutdown continues +3

10:05 02-Jan-19


Ebix has announced that it is acquiring 74.84% of Weizmann Forex Limited.  Weizmann has the second largest inward remittance business to India and is amongst the country's top four FX service providers.  Ebix has also made a public offer to acquire the remaining publicly-held Weizmann shares and will pay for the transaction with cash, using its existing bank line and reserves.  The transaction should be immediately accretive.  Full integration is expected to take 6 months and add 15 cents per share to the bottom line within a year.  For the record, that would be about 3.4% improvement on 2019 projections.

I like the direction here because market share can be so important in payments, and this transaction gives EbixCash a clear lead.  That said, I understand why many are worried that Ebix is trying to grow to fast, and incurring on too much debt.  All I can say is that this is the pace of business in India.  The company has executed on ambitious growth plans before, but that doesn't completely mitigate the risk.  I won't be surprised at some stumbles, and am willing to live with the risk so long as I don't see any missteps that would prevent reaching the finish line.

Another company that is now active in India is Resonant.  Its press release this morning mainly document the 20 accepted devices milestone achieved in 2018, but it does include some new information, including entry into the Indian as well as Chinese market.  A 5G device represents another first for the company, but no financial details are given.

Accordingly, EBIX is down less than the overall market this morning, while Resonant is declining somewhat more of the strange year-end bounce.  I still see this as short-term market dynamics that are partly driven by shifts in global competitiveness and debt.  The other main factor is hydrocarbon market volatility, where natural gas prices have collapsed back below $3.  Trading carnage is of less concern to me than long-term trends.  So, when I consider what's being done, and not done, on the other side of the globe, I'd rather take some long-term chances in companies with global businesses like these than placing my faith in the dollar as a store of value.