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“Dubious Purchase Objections”: An Open Letter to Ron Kalifa, OBE, Chairman of Network International Holdings PLC

Ron Kalifa, OBE
Network International LLC
Level 1
Network Building
Al Barsha 2
United Arab Emirates

December 22nd 2020

Dear Mr Kalifa,

We understand from the Network International “Business Update” of December 21st and from a separate Financial Times report of December 20th that Freshfields were appointed in late October to investigate the controversial DPO acquisition which was announced in July (and that this has now been publicly disclosed if not yet completed).

Aside from some specific commentary around DPO’s ownership of Acona (and its connections with a former Wirecard executive) it is not clear whether the investigation has been mandated to address wider investor concerns around the acquisition, namely:

Who are the main ultimate beneficiaries of the sale of DPO (for $288m) and what were their previous connections to Network International? Specifically, we understand that DPO was 65% owned by Apis private equity fund, itself managed by two partners with previous ties to Network International (Matteo Stefanel and Udayan Goyal)? Why has this not been disclosed as a “related party” transaction under IAS 24?

Moreover, exactly which parties were paid the $11-12m of “M&A costs” and $18-19m of “due diligence” fees (disclosed by Network International management on subsequent conference calls) which seem extraordinary given the size of the acquisition target (only $16m of stated revenues)?

We also note that the most significant DPO asset “Payfast” – which we understand accounted for 75% of DPO’s book value and $9m of ($16m) pro-forma 2019 revenues – was acquired by DPO as recently as July 2019 for just $28m? We also see that 3G Direct Pay was the main DPO asset before this acquisition but generated just €3.5m of revenues according to local filing? Please provide a bridge to reconcile the $16m of stated 2019 DPO pro-forma revenues from its subsidiaries. Network International management have also stated that the historic organic revenue growth rate of DPO has been approximately 40% but this does not appear supported by the local historic filings of DPO or its subsidiaries?

We trust that you agree that Freshfields should investigate these reasonable concerns and that their report will be made public as soon as it is completed?

Yours sincerely


Barry Norris
CEO and Fund Manager
Argonaut Capital Partners


As a consequence of Argonaut’s research into DPO as well as other matters, Argonaut is currently short NETW. This blog is intended for professional investors and does not constitute an investment recommendation