Italian digital bank illimity acquiring a 50% shares of HYPE

Italian digital bank illimity (listed in the Italian Stock Exchange - Borsa Italiana) announced acquiring 50% shares in HYPE. Share capital to be carried out via a series of corporate transactions entailing the contribution of a branch of illimity's business related to its open banking project (with no changes in strategy and targets of illimitybank.com). The underwriting of HYPE’s share capital increase to be paid in cash for a consideration of 30 million euro laid out for HYPE’s business plan, and the issuance of new ordinary illimity shares in a 7.5% share capital increase of illimity reserved to Fabrick for a consideration of approximately 45 million euro. An earn-out to be paid in illimity’s shares is also set forth, with further issuance of ordinary shares equal to around 2.5% of illimity’s share capital subject to the achievement by HYPE of certain profitability targets in 2023-2024

HYPE, which today with 1.3 million customers is already the leading fintech in the Italian segment of innovative financial services provided by non-bank fintech, targets over 3 million customers in a few years thanks to the technological, commercial and managerial synergies of the two platforms. The agreement worth around €140 million is the first of its kind in Italy and will see the two banks build the most extensive open banking platform.

Corrado Passera, Founder and CEO of illimity:

The digital financial services world is evolving fast. Technology, user experience, economies of scale and, above all, how quickly they can be achieved, are crucial success factors. Just as in the direct digital banking segment, illimity has strongly innovated and will continue to do so by expanding its field of action, in the non-banking segment we were delighted to take this opportunity to partner with the Italian leader to become a true industry benchmark. We are already closely linked to the Sella Group by technological collaboration and we are particularly pleased that it has decided to consolidate a long-term relationship between us also through an investment in illimity share capital.

Antonio Valitutti, current CEO of HYPE, will lead the Joint Venture. Carlo Panella, Head of the Direct Bank Division of illimity, will take the position of Chairman.

As of 30 June 2020, HYPE had over 1.2 million clients (1.3 million in September 2020) and reporteda half-yearly net loss of approximately 8 million euro. HYPE's business plan envisages substantialrevenue and cost synergies, with a profit of 3.5 million euro in 2023, up to around 17 million euro in2025.

illimity Direct Bank Division will benefit from cost synergies, mainly related to marketing andtechnology, an expected reduction in the cost of funding compared to its business plan, as a resultof a direct funding strategy focused on a larger pool of customers, and also from significantcommercial and strategic advantages.

Overall, this initiative - between the pro-rata profit contribution from HYPE, funding synergies andlower cost of direct banking activities - will immediately generate a positive incremental impact onillimity net result, estimated to be around 10 million euro in 2023 and around 20 million euro in 2025.Moreover, the deal is estimated to generate a slightly positive impact on illimity's regulatory capitalat closing date, set to increase thanks to the positive contribution of the initiative to the expectednet results in the period 2021-25.