A London court has laid out how Greek fintech Viva Wallet should be valued — a development that could prompt its sale after a fresh valuation.
It also could help patch up differences that have spurred JPMorgan Chase, which owns a 48.5% stake in Viva, and Haris Karonis’s WRL, which owns 51.5%, to sue each other.
Karonis argued, in court documents filed earlier this year, that Viva is being blocked from entering the U.S. and some European markets in an effort to keep its valuation down. Karonis also alleged JPMorgan’s payments business is allowed to compete with Viva in some markets, according to a February report in the Financial Times.
JPMorgan bought its stake in Viva in 2022 for roughly €800 million and, under the terms of that deal, the bank could take full control of Viva if it’s valued at less than €5 billion by July 2025.
At last count, there was a €2 billion gulf between Viva’s worth in the eyes of its own valuer, EY, and that figure as seen by JPMorgan’s valuer, Houlihan Lokey. But neither is anywhere near €5 billion. The former has estimated Viva at €3 billion; the latter, at €1 billion.
This month’s ruling, Karonis wrote in a blog post, “paves the way for a proper valuation of Viva,” adding that Houlihan Lokey’s calculation was “invalid because it was manifestly wrong.”
“In finding for WRL, the ruling rejects attempts by JPMorgan to rewrite the shareholder agreement by causing the valuation to take into account certain regulatory restrictions that apply only to JPMorgan (and not to Viva),” Karonis wrote. “Those regulatory restrictions were likely to considerably distort the valuation process and unduly diminish the Company’s value up to 50% to the benefit of JPMorgan and against the interests of the founders and the more than 200 stock-option holder-employees.”
Karonis had earlier alleged the 2022 deal creates “perverse incentives” for JPMorgan to limit Viva’s growth.
The London judge, Dame Clare Moulder, confirmed that Viva is subject to U.S. legal restriction but dismissed suggestions that JPMorgan had an incentive to depress the fintech’s value.
Lawyers for JPMorgan, at an expedited trial this year, said WRL “manufactured a dispute” about the valuation to pressure the bank to renegotiate the deal, according to Bloomberg.
The bank, meanwhile, has noted that fintech valuations have plummeted since the 2022 deal was struck.
JPMorgan, too, called the ruling a “great outcome.”
"With a financial stake in the company, we have repeatedly offered ways to help the company expand and succeed,” a spokesperson for the bank told Reuters. “The court has now provided a critical step to move forward with fair and transparent valuations — which could allow Viva to be sold soon, before the fintech M&A market further softens.”
In his statement, Karonis said a valuation under Moulder’s framework would “take into account Viva’s actual market position and a true set of financial projections, for both Europe and the U.S., extending to at least 2030, and properly captur[e] the Company’s full growth potential in those markets.”
Karonis said JPMorgan, just before the trial, had “finally accepted” that a Viva valuation that did not include future U.S. growth “was incorrect.”
“My aim is to restore the Viva team’s faith and trust in JPMorgan,” Karonis wrote. “I want a shareholder that respects the basic principles of corporate governance of a company, that does not create a toxic environment, and that prioritizes the Company’s best interests.”
Karonis also noted the pending departure of Takis Georgakopoulos, the JPMorgan payments executive largely credited as the architect of the Viva deal. The bank announced this month that Georgakopoulos is leaving to “pursue an opportunity outside the firm.”
“I hope that the recent leadership changes within JPMorgan Payments will provide an opportunity to restart constructive dialogue and to facilitate [Viva’s] growth,” Karonis wrote in his blog post.
Payments processor Fiserv is hiring Georgakopoulos, it announced recently.
