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(Alliance News) - Network International Holdings PLC on Monday said it has published "final responses" to the critical report published by short seller ShadowFall Research in relation to the company's link with failed German digital payments provider Wirecard AG.
Shares in Network International were down 5.0% in London in mid-morning trade on Monday at 347.40 pence each.
On its Investor Relations page, Network International clarified its rationale for buying DPO, its own financial position, and its governance policies.
"Therefore, we will not be publishing further responses to matters raised which we consider immaterial, factually inaccurate, historical, or that have already been addressed in our investor communications," the FTSE 250-listed payments solutions provider said Monday.
Network International had previously said there is no evidence of wrongdoing by Nairobi-based online commerce platform Direct Pay Online Group with regards to DPO subsidiary AnconaOnline GmbH's connections with Wirecard.
Acona, which "processed negligible volumes in relation to European cardholders purchasing travel services from DPO's merchant customers", has been in liquidation since the end of 2018. It was purchased from former Wirecard executive Dietmar Knoechelmann and others in 2013.
Network International is in the process of buying DPO for USD288 million. The transaction is expected to complete in the first quarter of 2021.
In a statement Monday, Chair Ron Kalifa added: "Integrity is central to all that we do at Network International, and we refute the concerns against the company. The board carefully considers issues raised by stakeholders and while there are limited associations between DPO and some individuals that are regrettable, the board is satisfied there is no evidence of wrongdoing by the DPO Group."
He continued: "DPO remains a highly attractive asset, as an online payments business with a leading pan-African presence. The acquisition will accelerate our growth and consolidate our position in the fastest growing payments market in the world. We are confident in the strength of our business, our culture, and the financial and operating discipline that underpins everything we do.
"We continue to be excited by the opportunity for growth in our markets and confidently look forward to executing on our strategy to build the leading payments business in the Middle East and Africa."
The Middle East and Africa-focused company has previously said it appointed Freshfields Bruckhaus Deringer LLP to investigate DPO following the collapse of Wirecard, which admitted in June to a EUR1.9 billion hole in its accounts. Top Wirecard executives were arrested on fraud suspicions soon after.
Freshfields Bruckhaus Deringer said it did not find any evidence of any wrongdoing by DPO or its management, stating that "no Wirecard directors or executives, past or present at any time, have ever been involved in the management of DPO."
However, short seller ShadowFall Research cast aspersions on Network International, claiming: "It appears that Network International has form in buying businesses at a significant cost, only to several years later impair almost all the value which was paid in cash. We believe this should raise concern. Especially in the context of its latest USD288 million acquisition of DPO Group."
It added: "Several of the metrics provided by Network International for DPO we regard as contradictory to historical reporting. Further, the projections provided by Network International's management relating to DPO, in our view, make little sense."
By Paul McGowan; paulmcgowan@alliancenews.com
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