RBS SELLS WORLDPAY TO ADVENT, BAIN FOR $2.7 BILLION

By Anne-Sylvaine Chassany & Andrew MacAskill - Aug 7, 2010

Royal Bank of Scotland Group Plc, the U.K.’s biggest government-owned bank, agreed to sell its credit- card payment processing unit to Advent International Corp. and Bain Capital LLC for 1.7 billion pounds ($2.7 billion).
RBS may receive a further 200 million pounds if the buyers’ returns hit certain targets, the Edinburgh-based bank said in a statement today. RBS will keep a 20 percent stake. It will also book a gain from the sale of about 850 million pounds after goodwill, separation and transaction costs, the bank said.

An employee walks into a Royal Bank of Scotland branch in London. Photographer: Simon Dawson/Bloomberg

 

Aug. 6 (Bloomberg) -- Richard Stovin-Bradford of the Financial Times' Lex commentary team discusses Royal Bank of Scotland Group Plc's first-half profit reported today. The U.K.'s biggest government-owned lender posted net income of 9 million pounds ($14 million), its first profit since 2007. Stovin-Bradford talks with Deirdre Bolton on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

RBS is being forced to dispose of the unit to comply with European Union state-aid rules after taking 45.5 billion pounds in a taxpayer-funded rescue during the financial crisis. The bank announced this week the sale of 318 branches to Banco Santander SA to comply with the ruling, and must also dispose of its insurance division.
Today’s sale “is another significant milestone in the Group’s restructuring program,” finance director Bruce Van Saun said in the statement. The sale values the unit, Global Merchant Services, at about 2.03 billion pounds, including debt.
Private equity firms such as Advent and Bain are seeking to invest more than $500 billion of cash they’ve raised from investors as the world economy emerges from recession, according to London-based research firm Preqin Ltd.
Tomkins Buyout
The purchase is the second-largest leveraged buyout announced in Europe this year after Canada Pension Plan Investment Board and Onex Corp.’s purchase of Britain’s Tomkins Plc for 2.89 billion pounds last month, according to data compiled by Bloomberg. In all, private equity firms have announced $78 billion of takeovers this year, double the amount in the year-earlier period, Bloomberg data show.
The division, also known as RBS WorldPay, generated operating profit of 249 million pounds in 2009 and employs about 2,560 people, RBS said. It’s Europe’s largest payment processor and the fourth largest in the U.S., the bank said.
“Advent and Bain will be making a very significant investment in the company to enhance its technology and expand the range of products and services offered to merchants,” James Brocklebank, managing director at Advent in London, said in the statement.
Advent, the manager of a 6.6 billion-euro ($8.8 billion) leveraged buyout fund, has no intention of combining WorldPay with U.S. payment processor Fifth Third Processing Solutions, Brocklebank said in an interview today. The Boston-based private equity firm acquired a 51 percent stake in the company last year from Fifth Third Bancorp, Ohio’s largest lender.
The two firms, which will each own about 40 percent of WorldPay, are financing the purchase with loans from RBS, Goldman Sachs Group Inc., UBS AG, Barclays Plc and Morgan Stanley, according to Robin Marshall, a managing director at Bain Capital.
The firms are using about 1 billion pounds of loans to fund the purchase, according to three people familiar with the talks, who declined to be identified because the terms are private.
To contact the reporters on this story: Anne-Sylvaine Chassany in Paris at achassany@bloomberg.net; Andrew MacAskill in London at amacaskill@bloomberg.net.
http://www.bloomberg.com/news/2010-08-06/rbs-will-sell-80-stake-in-worldpay-unit-to-advent-bain-for-2-7-billion.html 

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