Requiring faster response to market change, the 186 banks owning Nordic processor Nets decided to pursue an owner with better expertise and commitment. It also sought a buyer with the capital necessary to appropriately fund Nets’ IT and technology needs. In the end, it chose to sell to an investment consortium led by Bain Capital and Advent International.
Nordic payments processor Nets on March 25 agreed to be acquired for what amounts to US$3.14 billion in cash. Under the agreement, Bain Capital and Advent International, along with Danish pension fund ATP, would pay the sum to the consortium of Scandinavian banks that own the payment company.
The deal is subject to regulatory approvals but was expected to close in the second quarter. The companies had won an auction to earn the rights to talk with Nets, which provides payments services to five Nordic countries is owned by a group of 186 banks.
Based in Copenhagen, Nets is a leading Northern European provider of payments, information and digital-identity solutions. Founded in 1968, Nets employs 2,600 employees in Denmark, Norway, Finland, Sweden and Estonia, and it connects banks, merchants and businesses through its network.
In 2013, the company says it handled more than 6 billion card transactions supporting more than 33 million payment cards and over 500,000 merchants in the Nordics.
No expansion plans
In an interview with the Wall Street Journal, Robin Marshall, managing director and co-head of Bain’s financial-services team in Europe, said the consortium did not have plans to expand Nets outside of North Europe. Moreover, the buyers eventually would float Nets on a local exchange and have no plans to merge it with other payment operations they own, including WorldPay, which Bain and Advent jointly own.
In a statement, Peter Lybecker, Nets chairman, indicated the deal will help the company meet the emerging market’s needs.
“Today’s announcement has been preceded by an extensive review of Nets’ strategic alternatives,” he said. “The outcome of this review was that Nets needs a new owner with the expertise, commitment and financial resources to develop the business in a rapidly changing payments industry.”
Reasons behind sale
Nets operates in an industry that is undergoing significant change, with increasing competition, globalization, consolidation and regulation. As such, Nets has been faced with both risks and opportunities, the company noted in its statement.
“Against this background, Nets has taken a number of steps to protect and enhance its strategic position,” the company said.
In 2010, Nets was created in its current form through the merger of Norwegian Nordito (parent of BBS and Teller) and Danish PBS. In 2012, the company’s pan-Nordic platform was further expanded through the acquisition of Finnish payments company Luottokunta. At the same time, Nets had become a more commercial, efficient and customer oriented business operating at arms-length from its bank shareholders.
“As the pace of change in the industry accelerates, it has become increasingly evident that the current ownership and governance model with its current 186 bank shareholders, acting at the same time as owners, customers and in some areas competitors of Nets, is suboptimal,” Nets said in its statement. “To remain competitive, Nets needs clear governance and streamlined decision-making with a commitment to make necessary investments in IT and technology.”
No change to the existing regulation of Nets will occur, and Nets will continue to be supervised by the respective Danish, Norwegian and Finnish FSAs and competition authorities, the company said. Moreover, the ownership change will not affect the requirements for Nets with regard to data protection, and the consortium will implement additional measures to safeguard Nets’ data-privacy profile.
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