Asym Capital (Asym), a private equity group in Los Angeles, CA recently announced that they had placed over $15,000,000 in the ATM business over the last few months. Asym’s founder, Hunter Thompson, is confident that the ATM business isn’t going anywhere anytime soon, despite the recent discussions surrounding government-issued digital currencies.
“The reality is the infrastructure just doesn’t exist. We view the cryptocurrency space as a potential risk to the ATM business, but implementing a national digital currency, for example, would require a massive overhauling of the entire banking sector.”
Hunter believes that the core demographic that frequently uses ATMs, predominantly the unbanked and underbanked population, would likely be the last to adopt the technology if it is in fact rolled out in the future.
Of course, there are additional technologies that ATM investors should be contemplating as well. Mobile payment processors such as Venmo and PayPal have become quite popular over the last several years, with fewer and fewer people carrying around cash. However, that shift hasn’t impacted the core demographic of the ATM business given that all of those processors, and their competitors, require their users to connect the apps to their respective bank account.
“Most investors just aren’t tapped into this reality, but there are more than 20.5 million people in the US who are unbanked, or underbanked. This is a large and growing population.”
Hunter believes this trend will likely continue given the global economic picture.
“It has a lot to do with today’s low-interest-rate environment. Banks just don’t make money lending out money in today’s market. So, what do they do? Charge higher fees. Banks are making more money from implementing low-balance fees, late fees, transfer fees, and etcetera. If you have a $600 balance, is it really worth it to keep your money in the bank? Probably not.”
While the ATM business is certainly not a sector that is poised for a surge in popularity for the foreseeable future, the asset class’s tailwinds just might be stronger than its headwinds, especially when factoring in how few private equity groups are focusing on the niche. After all, investors who are willing to go right, when everyone is looking left, typically experience more favorable outcomes in the long run.
About Hunter Thompson
Hunter Thompson is an investor and placement agent. He is the founder of Asym Capital, as well as RaiseMasters, a mastermind for elite capital raisers.
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