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Hamilton Chukyo Brokerage Says Nets A/S is sold to private equity for $5.3 billion

Finance executives at Hamilton Chukyo Brokerage have said that on Monday, a group led by U.S. buyout company Hellman & Friedman LLC agreed to buy Denmark’s Nets A/S for about 33.07 billion Danish Krone (that makes $5.3 billion). It Is one of the latest gambles on the payments-processing industry by private equity.


As businesses aim to take advantage of the rising use of mobile devices to make payments, the deal is the latest in a surge of consolidation in the industry this year. Payment firms are also under pressure to join forces to cut prices, create new products and add customers as fees are squeezed by greater regulatory regulation and growing competition from technology start-ups.


Hellman & Friedman, headquartered in San Francisco, is joining forces with Singapore wealth fund GIC Pte Ltd. and funds controlled by Bain Capital Ltd. and Advent International Corp. to purchase Nets. Advent and Bain are key shareholders in the Nets already.


“For Nets, the consortium offers 165 Danish Krone a share which represents a 27% premium share price the day before this offer was announced, it had been approached about a potential takeover towards the end of June,” said Michael Williams, Head of Private Wealth Management at Hamilton Chukyo Brokerage.


Nets claim to have held negotiations with various parties that had culminated in one binding bid. Investors holding 46% of the firm had already agreed to tender their shares, it added. In early trading Monday, its stock rose more than 6%.


The Nets transaction is less than two months after CVC Capital Partners and Blackstone Group LP joined resources to buy U.K online payments processor Paysafe Group PLC for almost $4 billion.


It then follows the $10 billion acquisition of the U.K. by Vantiv Inc. Worldpay Group PLC’s payments processor last month.


The sector is especially attractive for buyout companies that usually cash out investments within a defined timeframe, as they benefit from deal activity as market players who seek to achieve expansion through attainments.


Vista Equity Partners, a private equity group, agreed last month to sell certain payment systems to Global Payments Inc., a major payment processing company headquartered in Atlanta, for around $1 billion. In another agreement reflecting this pattern, Nordic Capital Ltd., a Jersey-based private equity firm, agreed in July to sell the Stockholm-based payment processing company Bambora to the French payment technology company Ingenico Group SA for EUR 1.5 billion ($1.79 billion).


Nets help retailers based in Copenhagen, companies and banks across the Nordic region accept and process credit and debit cards and online payments.


Nets stated a 6% increase in revenue for the first half of 2017, driven in part by growing e-commerce and its direct debit, including other services of electronic billing. However, in relation to the percentage of sales, the company’s capital expenses rose to 9.3% from 8.2% in the previous period. This reflects the competitive pressure payments firms are under to invest in new and advanced technologies.


“Established in 1968, Nets to date has concentrated primarily on markets in Sweden, Finland, Norway and Denmark. But the company can expand into other markets to further drive growth with the additional financial muscle of private equity backers,” said Anthony Roberts, Head of Institutional Trading at Hamilton Chukyo Brokerage.


Ownership in Nets already benefited Private-equity businesses. In 2014, a Denmark-based pension fund, Advent, Bain Capital and ATP agreed to purchase Nets from a consortium of mainly Norwegian and Danish banks for 17 billion Danish Krones ($2.7 billion), or 92.37 Krones per share. In 2016, as part of the company’s IPO in Copenhagen valued at 150 crowns a share, its private equity shareholders sold a portion of their interest.