FPE generates 3x return on sale of Small World to Equistone

Oscar Geen
26 March 2018

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Equistone Partners Europe has acquired payment services provider Small World Financial Services from shareholders including FPE Capital and MMC Ventures.

FPE generated a 3x return on the sale after investing £12m for a 40% stake in the company in 2010.

It is the second exit in the sector for FPE this year after it divested Creditcall to US trade buyer Network Merchants for a 4.2x return in February.

Equistone drew equity from its latest buyout fund, Equistone Partners Europe Fund VI, which held a final close on €2.8bn earlier in March. Small World is the second investment from the new vehicle after the acquisition of Dutch greenhouse manufacturer Boal Group.

The GP plans to roll out its service in new markets, as well as pursuing bolt-on acquisitions.

Since FPE's original investment in May 2010, the group's revenues have quintupled to around £110m. Small World recently signed a partnership agreement with electronic payment services provider Ingenico Group. Ingenico acquired another payment technology company, Bambora, from Nordic Capital for €1.5bn in July 2017.

The EU's latest payment services directive (PSD2) is expected to force banks to open their infrastructure to other payment institutions. Frederik Näslund of Nordic Capital discussed the opportunity this created for private equity investment in the sector with Unquote after the GP's recent acquisition of Swedish payment technology firm Trustly.

Previous funding
MMC invested £2.4m in Small World in August 2007 and returned with another £2m investment in January 2009.

FPE joined in May 2010 to invested £12m in the company's series-C funding round in exchange for a 40% stake. FPE drew capital from its first fund for the investment.

Company
Small World was founded in 2005 and is headquartered in London. The company provides low-cost international payment services to consumers and businesses across Europe, North America, West Africa and South America. The company provides multi-channel payment services including direct-to-account and mobile wallet payments. It employs 680 people in 16 countries and generates revenues of around £110m.

People
Equistone Partners Europe – Dominic Geer (partner); Andrew Backen (partner); Richard Briault (investment manager).

Advisers
Acquirer – Quayle Munro (M&A); Travers Smith (legal); EY (financial due diligence); PwC (tax); Huntswood (regulatory due diligence); UX Fabric (IT due diligence); Marsh (insurance due diligence).
Company – Canaccord Genuity (corporate finance); Charles Russell Speechlys (legal).