Foley Trasimene Acquisition Corp. II

BFT Details

Merger Agreement with Paysafe: Foley Trasimene Acquisition Corp. II (NYSE: BFT) is a blank check company, and its objective is to effect a merger, asset acquisition, etc. with other business entities. The market capitalization of the company as on 20 January 2021, stood at ~$3.20 billion. As per a recent update, BFT and Paysafe Group Holdings Limited have entered into a definitive agreement for a merger. On the close of the expected transaction the combined entity will operate as Paysafe, and it plans to list on the NYSE under the ticker PSFE. The transaction indicates an implied pro-forma enterprise value for Paysafe at ~9 billion. BFT believes that the deal with Paysafe will enable it to accelerate growth and increase margins.

About Paysafe: Paysafe operates in a B2Band B2C global network with a powerful suite of digital wallet, eCash and integrated processing solutions. It has a balanced mix of products catering to markets in the U.S. and Europe. It has witnessed a volume growth of 12% in 2018-2019 and is expecting a growth of 15% CAGR for the period 20-23E.

Highly Diversified Business as on December 2020 (Source: Company Reports)

Investment from Cannae Holdings: Cannae Holdings, Inc has announced an investment of $350 million in the merger of BFT and Paysafe. It has invested the sum as a part of a private placement, in addition to a forward purchase agreement of $150 million. The deal is expected to close in the first half of 2021. Cannae Holdings will receive 54,294,395 million of Paysafe common shares and 8,134,067 million of Paysafe warrants.

The company had a cash position of $1.01 million as on 21 August 2020. It had reported total assets of $1.30 billion, including $1.30 billion in cash held in a trust account.

Balance Sheet as on 21 August 2020 (Source: Company Reports)

Stock Recommendation: As per the updates, Bill Foley will become the Chairman of the Board of Directors and Paysafe CEO Philip McHugh will continue leading the newly formed entity. BFT gave a positive return of 79.73% in the past three months and a positive return of 17.88% in the past one month. It is currently trading close to its 52 weeks’ high range of $17.59. On a technical front, the stock of BFT has a support level of ~$16.37 and a resistance level of ~$17.97. Considering the price movements and returns in the past months, limited history of operations and key risks associated with the business we suggest investors to book profit and give a ‘Sell’ rating on the stock at the closing price of $17.47, up by 5.56% as on January 20, 2021.

BFT Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Inseego Corp.

INSG Details      

Business Update: Inseego Corp. (NASDAQ: INSG) provides mobile broadband, fixed wireless access and cloud solutions for service providers and enterprise customers. The market capitalization of the company as on 20 January 2021, stood at ~$1.77 billion. As per a recent update, UScellular launched its first 5G high-speed internet router, the Inseego Wavemaker. This wireless solution from INSG provides high-speed internet access on UScellular’s 600 MHz 5G network to homes and businesses.

Q3FY20 Financial Update: The company reported revenue growth of 44% to $90.2 million, from the previous corresponding period. Adjusted EBITDA during the period was at $7.4 million and there was a GAAP net loss of $5.4 million, during the period. The cash position of the company stood at $42 million during the quarter-end.

Q3FY20 Financial Performance (Source: Company Reports)

Outlook: The company is focused on its R&D investment to further expand its 5G hardware offerings and integrating them with its cloud-based management platform, which will create additional revenue streams for the business.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation (Illustrative)

EV/EBITDA Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: The company reported a decrease in the current ratio to 1.55x in Q3FY20 from 1.69x in Q2FY20. INSG gave a positive return of 81.68% in the past three months and a positive return of 43.94% in the past nine months. The stock of INSG is trading above the average of its 52-week trading range of $19.49 -$3.91. On a technical analysis front, the stock of INSG has a support level of ~$13.54 and a resistance level of ~$19.41. We have valued the stock using an EV/EBITDA multiple-based illustrative relative valuation and have arrived at a target price with a correction of single-digit (in % terms). For the purpose, we have taken peers such as Sierra Wireless Inc (NASDAQ: SWIR), NETGEAR Inc (NASDAQ: NTGR), ORBCOMM Inc (NASDAQ: ORBC), to name a few. Considering the steep price movements in the past few months, decrease in liquidity and current trading level, we suggest investors to book profit and give a ‘Sell’ rating on the stock at the closing price of $17.95, up by 2.92% as on January 20, 2021.

INSG Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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