KKR has won the race to buy German payments group Heidelpay for more than €600m in a fresh sign of investor appetite for companies that offer digital alternatives to cash.
The private equity group’s offer for the AnaCap-owned business beat rival interest from Sweden’s Nordic Capital and EQT. Payments specialists Worldline and Nets also lost out, according to people briefed on the transaction.
M&A activity in the payments sector has been booming in recent years, with 2019 becoming the third successive year of record-breaking deal volumes. A structural shift towards digital and online payments instead of cash has driven up valuations and encouraged companies to combine in search of greater scale and geographic reach.
Heidelpay enables its clients to accept online and mobile payments, and is used by more than 30,000 merchants including companies such as L’Oréal. A person familiar with KKR’s strategy said the buyout group hoped to expand the group by adding customers in Germany.
Heidelpay expects to generate €40.5m in earnings before interest, tax, depreciation and amortisation this year, people with knowledge of its finances said.
Private equity groups have been involved in several payments deals in recent years. A consortium led by CVC and Blackstone bought Paysafe for £3bn in 2017, while Hellman & Friedman bought Nets for $5.3bn a year later before combining it with Concardis, which was owned by Bain Capital and Advent.
KKR was also involved in one of this year’s biggest payments deals, the $39bn sale of First Data to Fiserv. KKR was First Data’s largest shareholder, having originally bought the company in 2007.
Bain and Advent, the two US buyout groups behind the first takeover of Worldpay, have also spotted new opportunities in France and Spain, including units at Crédit Mutuel in France and BBVA in Spain.
The Heidelpay sale comes just two years after AnaCap bought a majority stake in the business for an undisclosed amount. Heidelpay has expanded through its own smaller add-ons, including last year’s acquisition of mPay24 and the purchase of StarTec in 2017.
As part of the agreed transaction, Mirko Huellemann, Heidelpay’s founder and chief executive, will retain a significant stake in the company.
Heidelpay’s current owner AnaCap, whose name stands for “analytics before capital”, has raised €4.7bn since 2005 in combined private equity and credit strategies. Last month it generated more than a 50 per cent internal rate of return, a closely watched figure of performance, from the sale of French business intelligence company Ellisphere.
KKR, Nordic Capital, Hellman & Friedman and EQT declined to comment. Worldline and AnaCap did not respond to requests for comment.
An official announcement of the transaction, which was agreed on Friday, is expected as early as this week.
For KKR, the purchase is the latest in a string of acquisitions in Germany as it seeks to build up its presence in Europe’s largest economy, including a minority stake in media conglomerate Axel Springer.
Additional reporting by Nicholas Megaw
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