Visa Readies To Acquire Brazilian Payments Provider Pismo

Visa Inc. V is reportedly getting close to making a deal to acquire a Brazilian cloud-based platform provider for banking services and payments, Pismo. The company, which is in advanced discussions, can announce the deal this month, per Bloomberg.

A final agreement has not been reached yet, and discussions can collapse. In late March, Valor Economico reported that Visa increased its offer for Pismo to $1.4 billion from its original offer of $1 billion. Backed by Amazon.com, Inc. AMZN and Softbank, the potential acquiree is on its path to global expansion.

Pismo has offices in the United States and the U.K. and expanded its operations in India and Singapore. These moves are expected to fuel its long-term growth. If the deal realizes, Pismo's strategically placed assets will be added to Visa, enabling the payments mammoth to continue its inorganic growth story.

Visa is facing competition for Pismo from different firms, including Mastercard Incorporated MA. Per Pismo's platform overview, it sports $208 billion in transactions per annum and has created 74 million accounts. Its series B fundraising of $108 million in October 2021 highlighted its growth path.

For Visa, mergers and acquisitions, partnerships and minority investments are some ways to achieve growth. The company consistently makes efforts to expand its Latin American footprint. These moves help Visa maintain its leading position in the payment network space. These acquisitions and investments are expected to accelerate V's progress and extend the boundaries of its capabilities and network.

Its strong financial position enables it to make prudent acquisitions. Visa exited the March quarter with cash and cash equivalents of $13.8 billion. The company generated net cash from operations of more than $8 billion in the six months ended Mar 31, 2023, which increased from $7.7 billion a year ago. Fiscal second-quarter free cash flow of $3.7 billion rose from $3.2 billion a year ago.

Price Performance

Shares of Visa have risen 16.2% in the past year compared with the industry's 6.9% jump.

Zacks Rank & a Key Pick

Visa currently has a Zacks Rank #3 (Hold). A better-ranked stock in the broader Business Services space is Remitly Global, Inc. RELY, which currently carries a Zacks Rank #2 (Buy). 

Based in Seattle, WA, Remitly Global is a digital financial services provider. The Zacks Consensus Estimate for RELY's 2023 earnings suggests a 7.4% improvement from the year-ago levels.

Image by Mohamed Hassan from Pixabay