SoftBank is considering acquiring 5% take in Wirecard, the German internet payment company

German payments company Wirecard said Wednesday that Japan’s softbank group plans to invest 900 million euros ($1 billion) in it and hold a stake of about 5 percent in the company, according to media reports. The investment will expand Wirecard’s presence in Asia, which is one of Wirecard’s major growth regions.

For softbank, the deal will further transform the Japanese telecoms operator under founder Masayoshi Son into a technology investor.

For Wirecard, the investment means it will have easier access to Asian markets. Moreover, SoftBank’s investment could be seen as a vote of confidence in the German digital payment company. At the end of January, Wirecard admitted that a law firm was investigating an allegation that it had acted improperly in its Singapore accounting activities. Since then, the share price of the German digital payment company has fallen by 30%.

 

The deal, which includes a strategic partnership that will be carried out using convertible bonds, could make SoftBank the second-largest shareholder in Wirecard, behind Wirecard chief executive Marcus Braun.

Softbank’s investment will help boost investor confidence in Wirecard. In January, the financial times published a series of reports alleging accounting irregularities at softbank’s Singapore operations.




Wirecard has repeatedly denied wrongdoing and said the findings of its internal investigation have clarified that. The company said on April 5 that an accounting executive involved in the Singapore business fraud allegations had left the company. It comes after German financial regulator BaFin previously banned shorting Wirecard company for two months and did not lift the limit until last Friday.

The partnership will expand Wirecard’s presence in Asia, one of Wirecard’s key growth areas. Softbank is one of several payment service providers for the ride-hailing company Uber. Softbank’s vision fund owns 15 percent of Uber. A representative for tokyo-based softbank confirmed the announcement but could not immediately comment further.

The payment services industry has yet to emerge as a clear global leader.

PayPal, ant financial, tencent and Paytm have all become major players, despite geographic limitations, while apple and samsung electronics have yet to gain significant market share.

“We are in the early stages of a massive global shift to electronic payments,” said Rob Chandra, a lecturer at the Haas School of Business at the University of California, Berkeley and a general partner at Ventures Park Venture capital. If Wirecard’s accounting problems are addressed, then this could be a smart investment. “