Nets owners weigh sale, sources say

20 August 2020 - 05:29 am UTC

by Amy-Jo Crowley, Ryan Gould and Maryna Irkliyenko in London

Private equity group Hellman & Friedman is weighing options for its stake in Nets, which is expected to lead to a full sale of the Danish payment services group, four sources familiar with the matter said.

 

The US buyout group has received direct approaches from suitors to sell its stake in Nets when it was channelling a bid for eBay’s Classifieds arm, according to one of the sources. Hellman & Friedman remains in talks to sell its holding, this source added.

 

Nets's other private equity backers – GICAdvent International and Bain – are also willing sellers, two of the sources said.

 

One of the sources said that the auction is pegged to launch following the Labor Day holiday in North America, which traditionally marks the end of the cultural summer season. Another of the sources said that there is no process expected to launch “in the next month”.

 

Hellman & Friedman and Singapore wealth fund GIC led a consortium of private equity investors, including Advent and Bain to acquire Nets for USD 5.3bn in a September 2017 deal that became the largest European leveraged buyout in almost five years. Advent and Bain cut the size of their stake in the asset from around 40% to 16% as part of the reinvestment. 

 

JPMorgan and Nordea advised Nets while the consortium was advised by Deutsche BankMorgan StanleyBank of America and MHS Corporate Finance.

 

Nets – Scandinavia’s largest payments processor – facilitates real-time payments between bank accounts, with operations in 20 countries across Europe. The Ballerup-headquartered group is said to be assessing a bid for the merchant payments arm of Swedbank and is expected to prove competitive in any pursuit of the asset despite the prospect of antitrust hurdles, this news service reported on Tuesday. JPMorgan is advising Swedbank on the sale.

 

According to one of the sources and a banker working in the sector, Nets generates EBITDA in the region of EUR 300m-EUR 400m. A fourth source familiar with the matter said the EBITDA sum is more likely to sit in the EUR 450m-EUR 500m range.

 

A deal could see the business fetch a valuation ranging from the high-teens to 20x EV/EBITDA driven by the performance of recent listings such as US-based Shift4 Payments, one of the sources said.

 

Hellman & Friedman’s move to explore options for its holding could be prompted by Nets’s inability to capitalise on earlier consolidation opportunities, including Heidelpay and Ingenico, a second banker working in the sector said.

 

Alongside financial sponsors, trade players FISFiserv in the US and French payments giant Worldline could also see logic in exploring a bid for the business, one of the sources and banker said.

 

Nets merged with Germany’s Concardis Payment Group in 2019, creating a EUR 1.3bn turnover and EUR 500m EBITDA entity.

 

MasterCard agreed to acquire Nets’s account-to-account payments unit last summer for USD 3.2bn (EUR 2.85bn) as part of its strategy to expand beyond card payments and become a “multi-rail” payments outfit. The deal was conditionally approved by the European Commission on Monday.

 

Nets, Hellman & Friedman and Advent declined to comment. GIC and Bain did not respond to requests for comment by the time of publication.