The board of payments business Nets has recommended that shareholders approve a takeover offer from a consortium led by US buyout firm Hellman & Friedman. The deal would value the business at DKK 33.1 billion (around $5.3 billion).
The Danish payments company has already received acceptances for the bid from shareholders representing 46% of the company, in addition to a letter of support from an individual investor who holds 3.3%.
The deal underscores the continuing interest in the sector, which has been undergoing a wave of consolidation this year. Vantiv reached an agreement in August to acquire its UK peer Worldpay in an £8 billion deal, for example, while Blackstone and CVC Capital Partners agreed to acquire Paysafe in July for almost £3 billion.
What makes the payments sector attractive is that it operates similarly to software subscription businesses, offering a steady—and to an extent predictable—income stream. Indeed, the recently acquired Worldpay recorded revenue growth of 15% in 2016, bringing its total to £4.5 billion, as a growing number of people and businesses use cashless technologies for their transactions.
Add to this the record number of mega-funds PE firms have raised this year and the capital they need to deploy, and the knock-on effects on valuations are almost inevitable.
Indeed, the high price environment was acknowledged by H&F's own Patrick Healy. The deputy CEO told The Financial Times after the Nets deal was announced last month: 'We paid the highest price and we paid the price we didn't want to pay because that's what was required to get the deal done'.