Deal in focus: ATP, Advent and Bain pay €2.3bn for Nets

Karin Wasteson
31 March 2014

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Advent International and Bain Capital, which both have a long experience of investing in the card processing payments sector, signed an agreement to acquire Danish payments company Nets at the end of March, four years after their acquisition of WorldPay.

ATP Private Equity Partners made the largest contribution to the deal: it invested DKK 3.6bn, including DKK 300m in equity and DKK 3.3bn structured as a payment-in-kind note. Created in 1964, ATP is Denmark's largest pension fund and manages DKK 593bn in pension savings for Danish citizens. Advent and Bain will provide DKK 2.6bn of equity each. Nordea, JP Morgan, UBS, Danske Bank, Deutsche Bank and Nykredit provided 50% of the equity in the form of a senior secured debt package for the transaction.

The sale process was initiated following a review of strategic options by Net's board of directors last year and the entire bidding process took around nine months from start to finish. The deal is expected to complete in Q2 2014.

The new owners aim to expand Nets from the Nordic region into the northern European markets as well as focus on investing in IT and technology. The consortium also anticipates a future listing of Nets on a local exchange when it deems the company to be ready.

Cash is dead
Advent and Bain have previously completed more than 20 investments relating to the payment services sector in several geographies between them. The private equity firms acquired payment processing company WorldPay together in August 2010 from Royal Bank of Scotland for slightly more than £2bn, taking a 40% stake each. Although the two firms own several other payments processing companies, the Boston-based buyout firms said they have no intention of merging Nets with their other holdings in the sector at this stage.

With roots dating back to 1968 and headquartered in Copenhagen, Nets provides payment, information and digital identity solutions. As Scandinavia's largest card payment company, Nets services 33 million payment cards and handled six billion card transactions in 2013. The group employs 2,600 people in Denmark, Norway, Finland, Sweden and Estonia. It has a particularly strong presence in Norway and Denmark, where it is a household name.

Nets was created in its current form in 2010 through the merger of Norway-based Nordito, the parent company of BBS and Teller, and Ballerup-based business PBS. The group then acquired Finnish payments company Luottokunta in 2012.

The existing shareholders, a group of 186 Danish and Norwegian banks including Nordea, DNB and Danske Bank, will receive DKK 92.37 per share in connection with the transaction. They will also receive a dividend for 2013 amounting to DKK 498m, which corresponds to DKK 2.70 per share. The Danish central bank was also a shareholder in Nets.

Financial services group Nordea is the largest shareholder in Nets with its 20.7% stake. Nordea said its total proceeds from the sale will be around DKK 3.5bn and will lead to a tax-free capital gain of almost DKK 2.7bn. The transaction is expected to boost Nordea's core tier-1 ratio by close to 25 basis points. In addition, the Swedish bank will receive a dividend for 2013 totaling DKK 103m.

People
Advent International – James Brocklebank
Bain Capital – Robin Marshall
ATP – Carsten Stendevad

Advisers
Equity – UBS (Corporate finance); MHS Corporate Finance (Corporate finance); Infima (Corporate finance); Kirkland & Ellis (Legal); Accura (Legal); Hannes Snellman (Legal); Wiersholm (Legal); Marlborough Partners (Debt advisory).
Company – JP Morgan (Corporate finance); Gorrissen Federspiel (Legal); Bech Bruun (Legal); BAHR (Legal); Roschier (Legal).