Payment systems firm PayPoint has agreed to make a further strategic investment in open banking group obconnect, increasing its interest to 59.3% of the company.

The investment, worth £10.5m, aims to leverage obconnect’s open banking technology platform and unlock more opportunities within both the PayPoint business and obconnect’s new business streams.

In July 2022, PayPoint made a minority investment in obconnect, which enabled PayPoint to offer open banking services to both new and existing clients.

As a result, PayPoint has seen over 25 clients contracted for open banking services, including American Express and Citizen’s Advice, while over the same period obconnect has secured contracts with several banks and building societies.

“We’re delighted to be taking majority ownership of obconnect and strengthening the partnership we have forged over the past two years,” PayPoint CEO, Nick Wiles, said.

“The obconnect team, led by Darran Morford, will continue to drive further growth opportunities in the open banking sector for the business and this investment further underpins our confidence in achieving our target of £100m EBITDA by the end of FY26.”

The investment comprises the £3m original convertible loan note, which will now be converted into ordinary shares along with a new investment of £10.5m in cash which, combined, will give PayPoint a 59.3% interest in obconnect.

PayPoint also confirmed the agreement includes a put option for the group to obtain the remaining 40.7% of obconnect for a total cash amount of up to of £20m, with this consideration dependent on the company’s future performance.

obconnect CEO, Darran Morford, added: “PayPoint have been the perfect partners for us over the past two years and we’re pleased to be cementing that partnership to fuel further growth in the next few years.”

The investment remains subject to regulatory approval, with completion expected in early October.

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