Douugh to acquire Radical DBX in major push for embedded finance and B2B expansion

The market seems to approve of the proposed move by Australian fintech Douugh (ASX: DOU) to acquire US digital banking specialist Radical DBX (R-DBX).

Founded by some of the industry’s best and brightest alumni from organisations such as SoFi, Mastercard, Galileo Financial Technology, Urban FT and Lending Club, R-DBX has contracts with some of the leading US fintechs, banks and credit unions.

News of the proposal has seen Douugh shares move strongly higher in Friday trading on the Australian Securities Exchange.

Share issue

Douugh will acquire 100% of R-DBX via the issuance of 892,823,759 DOU shares at a price of $0.005 each.

There will also be three tranches of performance consideration in the transaction, with the consideration to be determined based on the achievement of certain revenue criteria.

Douugh says R-DBX remains a cash flow positive business, generating around $1.1 million in revenue in 2023.

“We are delighted to announce the proposed acquisition of R-DBX, […] which has amassed a high-quality customer base of fintechs and financial institutions through their own limited embedded finance offering,” Douugh chief executive officer Andy Taylor said.

Capital raising

R-DBX will be rebranded as Stakk Technologies and seek to upsell customers with an expanded array of products and services leveraging Douugh’s cloud-native orchestration banking platform technology.

“This acquisition will give us a major head start in launching our embedded finance offering, with a core focus on credit-as-a-service in the US market as well as scaling up our presence in Australia and later in the wider Asia Pac[ific] region,” Mr Taylor said.

“Importantly, it gives us the opportunity to commercialise the US component of our technology platform, which we have invested so heavily in developing since our founding.”

“This is a major win for our shareholders.”

Douugh – which also intends to rebrand as Stakk to “reflect its strategic focus on business-to-business (B2B) platform services” – has secured $1m in working capital via a convertible loan from US-based Relentless Fintech Partners.