Nuvei Corp.

After conducting a forensic financial and accounting review, Spruce Point believes shares of Nuvei Corp. (TSX and Nasdaq: NVEI), a highly promoted payments processing technology company, has covered up a pattern of business failures, lack of organic growth, and a web of relationships with individuals connected to major Ponzi Schemes and alleged fraudulent activities

Nuvei claims it was founded in 2003 and its predecessor was Pivotal Payments. However, conspicuously absent from the narrative is that CEO Phil Fayer operated PaySystems. PaySystems collapsed, leaving aggrieved merchant customers across North America without their money, and multiple claims of fraud by CEO Fayer. During this time period, we have evidence that Fayer embellished his educational credentials by falsely claiming he graduated from Concordia University. From 2010-2018, we have evidence that Pivotal wasn’t growing until a new round of private capital and a shift toward European acquisitions. Now on its third rebrand, Nuvei is reporting remarkable financial success, wildly expanded margins at its European targets, and cash flow after years of operating in the red. Meanwhile, we believe it is under pressure and declining organically in North America

Buyer beware: Nuvei’s financial disclosures are weak and we believe results are being temporarily enhanced from concentrated exposure to high risk gaming and eCommerce. In addition, we find inexplicable 2,000+ basis point margin improvements upon Nuvei’s closing of SafeCharge and Smart2Pay. Based on our research, we believe both businesses were under pressures prior to Nuvei’s acquisition.  Furthermore, Nuvei’s CFO and Corporate Development Officer’s biographies fails to disclose executive roles at FireOne Group, floated on London’s AIM exchange, and whose parent disgorged $19.2m in criminal proceeds

Nuvei’s EVP of Partnerships was recently referenced in a $100m fraud and disappeared from the website, along with its Senior Legal Counsel. In addition, we believe Nuvei does business with the adult film industry, which could make its stock ownership unpalatable to ESG focused funds.

Nuvei commands a premium valuation to financial technology peers at 15x and 34x 2022E sales and EBITDA, but we believe it should trade at a discount to incorporate our documented concerns. In addition, we provide evidence to suggest that that best of Nuvei’s share price expansion is behind it. We see 40% – 60% downside risk