Corsair and Palamon in MBO for Currencies Direct

JosУЉ Rojo
12 August 2015

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Corsair Capital and Palamon Capital Partners have acquired UK foreign exchange and payment service Currencies Direct for more than ТЃ200m, investing alongside the management team.

Pending regulatory approval, the takeover is expected to be finalised by year-end.

Currencies Direct's management team increased the stake with their investment. Meanwhile, the company's founder Mayank B Patel was appointed honorary president and will stay on board as shareholder.

The contribution by either private equity firm remains confidential, but Corsair typically invests $50m in businesses within the financial services industry, while Palamon's ticket size is usually in the €15-80m region.

Both firms stated they were first attracted by the company's growth potential within consumer-focused financial services, as well as the extensive network of affiliates it uses to distribute its financial products.

The fresh capital will fund Currencies Direct's international expansion from its current presence in the UK, France, Spain, Portugal, the US, India, Australia and South Africa.

The company, which has always been privately owned and claims to have had no existing debt obligations prior to the MBO, will continue to target development across its key areas in private foreign exchange and SME private exchange. According to its estimates, both segments represent a combined £3bn in business in the UK market, with expectations for further growth in the future.

Currencies Direct's buyout is the second to take place in the UK consumer finances space recently. In early August, Permira picked up Leeds-headquartered debt purchaser Lowell Group from TDR Capital for around £1.1bn to then merge it with German financial services GFKL, acquired by the GP in a €600m SBO in May.

Company
Founded in 1996, Currencies Direct is a financial business providing foreign exchange services to more than 150,000 individuals and corporates, particularly SMEs. According to its figures, it oversees an average of $4.5bn in transactions in more than 100 currencies every year.

The company, which claims to be the first service of its kind in the UK outside banks, operates a network of 12 offices in the UK, France, Spain, Portugal, India, South Africa and the US. With headquarters in London, it currently employs around 250 people.

People
Corsair's work on the deal was led by chairperson Lord Davies of Abersoch, while Palamon was represented by partner Daan Knottenbelt. Mayank B Patel founded Currencies Direct and is set to become its honorary president, while Keith Hatton is its current CEO.

Advisers
Equity – Canaccord Genuity (M&A); PwC (Financial due diligence, tax); Slaughter and May (Legal); CIL (Commercial due diligence); Willis (Insurance due diligence).
Company – FT Partners (M&A); Fieldfisher (Legal); BCG (Commercial due diligence).
Management – Beachcroft (Legal).