Worldpay float in doubt as suitors fight £6bn bid war
WORLDPAY is at the centre of an increasingly fierce bidding war that could scupper the chances of the British payments giant floating on the stock market, it emerged yesterday.
The firm, once part of Royal Bank of Scotland, has been owned by private equity outfits Bain Capital and Advent International since 2010.
It had been expected to launch an IPO in the coming months, hiring Goldman Sachs, Bank of America Merrill Lynch and Morgan Stanley to manage the flotation, while Barclays’ deputy chairman Sir Michael Rake was lined up to become chairman. But a group of rival payments companies and other private equity firms is now seeking to buy the business, which offers services including payment facilities for retailers and cash machine operations for banks.
French Ingenico Group has become the latest to put in a bid, which would value the business at more than £6bn, and create a new combined entity worth as much as £11bn.
Such a merger could have implications for Sir Michael. His move from Barclays, where he has been on the board for seven years, was designed to fit in with the stock market flotation, but a trade buyer could have other ideas for the future of the business.
German-based Wirecard has also put in an offer, while other private equity groups are also interested. Blackstone and Hellman & Friedman have put in a joint bid, while JP Morgan’s private equity arm is keen to buy the business.
A final decision is expected in the coming weeks. Worldpay made an underlying profit last year of £765m on revenues of £3.6bn.
“Everything is on the table – the market turmoil this week has not put anyone off,” said a source close to the sale process. “The owners are not going to get an IPO where they completely sell down their holdings at once, so what they think is that the company could do well over the next 18 months, which would give them more upside on the remaining stake.”
Anticipating that its value will rise over time, the current owners argue that any trade buyer should offer to value Worldpay more highly than an initial market valuation in a stock market float.
Another incentive for Bain and Advent to run an IPO, which would allow them to hold a large stake in the company for longer, is that the fund through which they invested in Worldpay has now closed. That means the companies cannot reinvest the proceeds of the sale in a new target – they must give it back to all of the investors who backed it. Accordingly, they want to get the biggest payout possible on the sale to boost investor returns.