Largest Deal in Payments and it did not happen in the US, Nets $3.14 Bn acquisition by US PE firms

4 years after purchasing Royal Bank of Scotland’s processing unit, PE firms Advent International and Bain Capital are at it again. This time the two US Based groups collaborated with Danish Pension Fund ATP Group to buy payment services company Nets Holding from a group of Nordic banks for $3.14 Bn (17 billion Danish crowns). After a strategic review last year, Nets (best known as the biggest in Card transactions) decided it should no longer be owned by its customers and needed money to invest in new systems. The two acquiring PE firms are quite bullish on payments sector as they also own WorldPay.

Nets handles payments in the five Nordic countries and has strong positions in Denmark and Norway. The company supports more than 33 million payment cards and over 500,000 merchants in the region, and handled more than six billion card transactions in 2013. After a strategic review last year, Nets decided that it should no longer be owned by its customers and needed money to invest in new systems.

Points to note:

  • Nets was formed in 2010 through the merger of Norwegian Nordito and Danish PBS, and bought Finnish payments company Luottokunta in 2012.
  • The company manages Dankort and BankAxept, Danish and Norwegian domestic card schemes.
  • Last year it handled over 6 Bn card transactions. Nets’ service supported more than 33 Mn payment cards and 500,000 merchants in the Nordics.
  • The company had revenue of 5.96 billion Danish crowns in 2012 and made a net profit of 682 Mn.
  • The acquisition will be part-funded with debt provided by a group of banks including JP Morgan, Nordea, UBS, Danske Bank, Deutsche Bank, Mizuho and Nykredit.
  • Nordic banks DNB, Nordea and Danske Bank announced separately that they had agreed to sell their stakes in Nets to the private equity firms.
  • The Danish central bank was also a shareholder.

'We see a compelling investment opportunity to transform Nets from a strong Nordic company into a Northern European leader within the payments industry,' said ATP’s Carsten Stendevad. The transaction is subject to regulatory approvals and is expected to close in Q2 this year.

'We think that Nets has great opportunities both organically and inorganically in focusing on the Nordics markets,' Robin Marshall, MD at Bain Capital. 'We certainly wouldn't rule out going into other countries, particularly those in the Nordic region where we don't have a strong presence currently, he added.

Also Read about how Nordic Countries are leading in payments Biggest Mobile Payments success story, and it was not written in the US