CHAPTERS Group (CHG) M&A announcement summary

Strategic transaction, expansion, and segment evolution

• Fintiba, Coracle, and Expatrio merged into a new holding, making financial technologies about a third of group revenue and creating a segment focused on international students and skilled professionals in Germany.

• The segment will offer blocked accounts, health insurance, and, through FIB Frankfurt International Bank AG, current accounts and debit cards, with new product launches expected to extend customer relationships.

• The merger includes Coracle, acquired by Fintiba in December 2024, further increasing market share and group revenue.

• Substantial synergies are expected from integrating three similar businesses, focusing on cross-selling, product development, and leveraging AI solutions group-wide.

• Bastian Krieghoff appointed to the Group Executive Board, taking end-to-end responsibility for financial technologies.

Market opportunity, positioning, and growth drivers

• The merged group targets international students needing blocked accounts and related financial services for German visas, serving over 500,000 customers from 190 countries.

• Germany's political support for international students and skilled labor shortages drive market growth, with a 6% annual rate over the past decade.

• The group aims to provide long-term financial products tailored to international clients, addressing gaps in the German banking market and supporting exports.

• Collaboration with universities, education agencies, and authorities will be strengthened to enhance market reach.

• The business model focuses on high-quality, mission-critical, specialized products with a stable, reliable infrastructure.

Financial outlook and capital allocation

• Pro forma 2024 revenue for the segment is projected at €42 million, more than double previous levels, with organic growth in the low teens anticipated for 2025.

• The transaction was structured to be equity-efficient, using significant debt to increase group ownership to 61.8% while preserving capital for other investments.

• The capital structure includes shareholder loans, mezzanine debt, vendor loans, and senior secured debt, with a blended interest rate slightly above 8%.

• The financial technologies segment is highly profitable, with incremental revenues expected to come at higher margins than the group average.

• Near-term focus is on debt repayment, with future cash flows potentially reinvested or distributed depending on opportunity.