Continuing a hot streak for online and digital payments providers, Ballerup, Denmark based Nets A/S has announced that it is embarking on an IPO. The planned offering will see the company’s shares list during Q4 on the Nasdaq Copenhagen exchange, with the company seeking to raise proceeds of DKK 5.5 billion, or about USD $825 million.
Nets was bought two years ago from a group of Nordic banks by a Private Equity investor group led by Bain Capital and Advent International for $3.1 billion. While the company has grown its revenues nicely since the acquisition, it isn’t clear yet whether or not Bain and Advent will book a gain from the deal as the company didn’t disclose its planned valuation for the IPO.
However rule-of-thumb in the IPO business is to offer about 25% of the company’s shares for sale. If that holds true here, then the total company valuation is expected to be in the $3.3 billion range – meaning a fairly small profit for the buyout group.
We would note that Bain and Advent are the same two firms which bought out payments company Worldpay, which went public late last year on the London Stock Exchange. Worldpay has had something of a rocky start to its life as a public company. Worldpay shares plunged in March after the company reported an FY 2015 loss of £29.8 million, but have since recovered nicely and are trading at about a 25% premium to the £2.40 IPO price.
An excerpt from the Nets A/S IPO press release reads as follows:
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Nets announces intention to launch an Initial Public Offering
Nets, a leading provider of digital payment services and related technology solutions across the Nordic region, today announced its intention to launch an Initial Public Offering (“IPO” or Offering”) of its shares and to list on Nasdaq Copenhagen.
The intended IPO is expected to consist of an issue of new shares to raise proceeds of approximately DKK 5.5 billion and a partial sell-down of existing shares by the current Nets shareholders. Together with amounts drawn under a new banking facilities agreement to be put in place subject to the IPO, the Company’s proceeds from the Offering are proposed to repay existing debt. The total offer size will be announced in connection with the publication of a prospectus by the Company. Nets is currently owned by certain funds managed by Advent International Corporation (the “Advent Funds”) (43.5%); certain funds advised by Bain Capital Private Equity (Europe) L.L.P (the “Bain Capital Funds”) (43.5%); ATP, through its investment vehicles, ATP Private Equity Partners and Via Venture Partners, (jointly referred to as “ATP Investment Vehicles”) (5%); with the balance held by other co-investors, members of Nets management and employees.
Bo Nilsson, CEO of Nets, said:
The IPO of Nets is the next step in the development of the Nets group following a period of rapid growth and considerable investment, during which the business has been transformed. Nets is now a highly commercial, customer-centric, innovative leader in the fast-growing digital payments space. We believe these changes, combined with our unique business model and the exceptional efforts from our employees, make us a company well placed for long-term future growth and a compelling story for potential investors.
Inge K. Hansen, Chairman of Nets, said:
Nets is at the centre of the digital payments ecosystem in the Nordic region. We have a highly experienced management team, which has delivered strong revenue growth and repositioned the business through a combination of operational improvements and significant investment in both existing and new products. We are excited about the opportunity for new investors to participate in Nets’ future journey and would like to thank our customers for their continued support. We are proud to be a Nordic market leader in digital payments, and our planned IPO is the next step in our development to create a Nordic champion.
James Brocklebank, a Managing Partner at Advent International and member of the Nets Board of Directors, said:
We are delighted with the progress Nets has made over the past two years. Management, together with a highly motivated team of employees, has done an outstanding job of transforming the company into a fast-growing, innovative market leader. When we made our initial investment, we envisioned a future listing when Nets was ready. The company has exceeded its ambitious performance targets and done so faster than expected, so we are now executing on our plan. We believe Nets has significant growth potential as a public company and look forward to continuing our relationship as major shareholders.
Robin Marshall, a Managing Director at Bain Capital Private Equity and member of the Nets Board of Directors, said:
Our ambition when we invested in 2014 was to help build the Nordics Payments Champion and it’s clear that Nets is now not only that but one of the best payments companies in the world. Reliability and security have been our top priorities, but we’ve also helped management to build an efficient business with a scalable platform and relentless focus on innovation and customers. These are hugely valuable qualities that have accelerated the company’s growth in an increasingly regulated, competitive and consolidating global payments industry.
Carsten Stendevad, CEO, ATP, said:
The transformation of Nets has exceeded our expectations by far and has been a very lucrative investment for our pensioners. We look forward to supporting Nets in the next phase and we will continue as shareholders.
Bank syndicate supporting the IPO
Deutsche Bank, Morgan Stanley and Nordea have been appointed to act as Joint Global Coordinators and Joint Bookrunners for the intended IPO. Danske Bank, DNB Markets, J.P. Morgan and UBS Investment Bank have been appointed to act as Joint Bookrunners. Carnegie, OP Corporate Bank, SEB, SpareBank 1 Markets and Sydbank Markets have been or are expected to be appointed to act as Co-Lead Managers. Lazard & Co. Limited is acting as financial advisor to Nets.