PE firms to acquire Nets Holding for $3.1bn

May 2014 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

Private equity (PE) firms Advent International and Bain Capital, along with Danish pension fund ATP, have agreed a deal to acquire Nordic card-payment business Nets Holding A/S for $3.1bn.

The deal, which was announced on 24 March, will see the consortium take 100 percent of the share capital in Nets from the company’s existing shareholders, a group of 186 primarily Danish and Norwegian banks. The consortium will pay DKK 92.37 for Nets, however under the terms of the deal shareholders will also receive 2013’s dividend which totals around DKK 498m, or DKK 2.70 per share. The transaction will be partly funded by debt which has been provided by a number of banks including JP Morgan Nordea, UBS, Danske Bank, Deutsche Bank, Mizuho and Nykredit.

Both Nets and the consortium expect the deal to close in the second quarter of 2014, although the completion of the sale is subject to regulatory approval. Nets’ board of directors has unanimously recommended the offer to the company’s existing shareholders.

Nets, headquartered in Copenhagen, Denmark, is one of the pre-eminent Northern European payment providers. The company was founded in 1968 and employs 2600 employees across Denmark, Norway, Finland, Sweden and Estonia. In 2013, the company handled more than 6 billion card transactions, and provided support for more than 33 million payment cards and over 500,000 merchants in the Nordics.

However, despite the company’s solid performance in 2013, Nets and other payment firms are facing an increasingly difficult business environment. A marked change in consumer tastes has seen a tangible shift in the numbers of transactions from credit and debit cards to online and mobile payments. Following a 2013 strategic review the company decided it should be sold. In a statement announcing the deal, Nets chairman Peter Lybecker noted “Today’s announcement has been preceded by an extensive review of Nets’ strategic alternatives. The outcome of this review was that Nets needs a new owner with the expertise, commitment and financial resources to develop the business in a rapidly changing payments industry. The overriding focus for the Board of Directors of Nets has been to select the best owner out of many interested parties with a clear understanding of the role Nets plays in society, including the importance of developing Nets’ unique sector solutions such as Dankort and BankAxept and the need for safeguarding data.”

The company’s new PE owners expect to own Nets for around five to seven years before exiting via an IPO. The consortium will continue to focus Nets’ attentions primarily on the Nordic market where the majority of the company’s revenue is generated. Indeed, Denmark and Norway accounted for approximately 88 percent of Nets’ total revenue in 2012. Nets generated revenue of DKK 5.96bn in 2012 and made a net profit of DKK 682m.

The deal for Nets is the third-largest PE backed buyout in Europe in 2014 and represents another in a long line of investments in the Nordic region by both Advent International and Bain Capital. The firms have been investing in the region for over 20 years. Each of these firms and their Danish partner have committed substantial financing to the Nets acquisition, and Nets’ future board will reflect those commitments. The new board will consist of European nationals from Advent, ATP and Bain as well as independent members and employee representatives. Robin Marshall, managing director and co-head of Bain’s financial services team in Europe, said “Nets is a household name across the Nordics with a strong reputation built on a foundation of trust. Our history of working with similar businesses has taught us that a reputation for operational reliability and rigorous data protection is hard won and easily lost, and both will be absolute priorities for us in the years ahead. We bring a strong pool of operating resources and are committed to supporting the company’s management in accelerating the growth and maximising the potential of Nets.”

Richard Summerfield