Bridgepoint makes 8.8x on sale of Trustly to Nordic Capital

Nordic Capital acquired a majority stake in the company alongside Swedish VC firm Alfvén & Didrikson and the company's founders and management.

Bridgepoint made the divestment from its €350m growth equity vehicle, Bridgepoint Development Capital II. It acquired a 43% stake in Trustly for €23m in 2015.  

The company reported revenues of €23m in 2016 and has recorded revenue growth of 50-70% year-on-year since, Unquote understands.

Nordic Capital drew equity for the transaction from its latest buyout fund, Nordic Capital IX, which is expected to hold a final close above its €3.5bn target in the coming weeks.

Trustly is the third investment from the new vehicle after the GP acquired a German dental group in February, and earlier this week bought ophthalmology outpatient chain Ober Scharrer Group from Palamon. In total, Nordic Capital expects to make 10-12 investments from the new fund.

Nordic Capital's Fredrik Näslund worked on the deal and was also responsible for the GP's investment in Bambora, another Swedish payment business that it sold to Ingenico Group for a €1.5bn enterprise value and a 5x return in July 2017. Even though the companies are similar, the investment plans differ, Näslund told Unquote: "With Bambora, add-ons were a major part of the value creation plan. Here we have a plan that's going to be focused on organic growth. We do have a list of M&A targets, but the key driver of value creation will be tailoring the product to local markets and hiring sales people to increase the business volumes in key markets."

Bridgepoint kick-started the company's expansion with its earlier investment. In 2014, the service was available in nine countries, and it has now been rolled out across 29 European nations.

Under Nordic Capital's ownership, the company will strengthen its operations in key European markets where its volumes are lower than its potential, including the UK and Germany. This will be aided by the EU's latest payment services directive (PSD2) that governs how banks handle customer account information and other data, Näslund said: "The PSD2 legislation will force banks to open their infrastructure for other payment institutions and, as the only account-to-account payment technology company operating across so many jurisdictions, Trustly is very well placed to benefit."

However, Näslund thinks the technology has the potential to go global: "If you look at what Trustly is doing today, it is next-generation technology. Cash was the first generation, cards was the second and now account-to-account payments is the third generation. We think that account-to-account payments will make up 30% of the payment market in nine or 10 years."

Due to this view, Nordic Capital had been tracking the company for many years and pre-empted a full auction for the asset when Bridgepoint appointed Citi in December. "We have followed this company for years and been close to the owners, founders and management. We approached the owners at an early stage and it was only at the end of the process that they appointed an adviser to run the sale," said Näslund.

"The cash flows are extremely good and we have structured the financing and debt levels to support the fundamental business requirements. It being a pre-emptive process influenced the number of contacts we could take, of course,” he added.

Sveriges Riksbank and SEB provided debt for the transaction.

Company
Founded in 2008 and headquartered in Stockholm, Trustly provides online payment services for merchants and online marketplaces. The company's system provides instant pay-in and pay-out services based on bank transfers, rather than credit or debit cards.

The company offers cross-border payments to and from consumer bank accounts at 3,000 banks in 29 European markets and connects businesses and consumers within e-commerce, travel, gaming and financial services.

People 
Nordic Capital – Fredrik Näslund (partner).
Bridgepoint Development Capital – Johan Dahlfors (partner).
Trustly – Oscar Berglund (CEO).

Advisers
Acquirer – PwC (financial due diligence); GDA (legal).
Vendor – Citi (corporate finance); Mannheimer Swartling (legal).

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