RBS To Share in Worldpay Windfall
One of the businesses carved out of Royal Bank of Scotland (RBS) as punishment for its rescue by taxpayers is preparing a refinancing that will pay its shareholders a handsome dividend that could run to hundreds of millions of pounds.
I have learnt that Advent International and Bain Capital, the private equity groups which own Worldpay, a card processing company, have hired investment banks to assemble the deal.
Advent and Bain, two of the world's biggest buyout firms, have appointed Goldman Sachs, Morgan Stanley and RBS' investment banking arm to help them take advantage of red-hot debt markets that have prompted many firms to attempt recapitalisations of their portfolio companies in recent months.
People close to Worldpay said a refinancing was likely to take place during the first half of 2013, although they cautioned that the appointment of the three advisers had only just happened and that no decisions had been taken about how substantial it would be.
As part of any refinancing, the shareholders are expected to agree on the payment of a sizeable dividend, according to one person familiar with their discussions with bankers.
That would provide some rare good news for RBS, which remains the owner of approximately 18% of Worldpay's shares and so would receive a commensurate proportion of any dividend.
Worldpay was sold by RBS in August 2010 for £1.7bn as part of the state aid agreement struck by the Edinburgh-based bank with the European Commission a year earlier.
RBS has had to sell a string of other valuable assets, including Sempra, a lucrative commodities trading operation, Direct Line Group, the well-known UK insurer, and 315 branches and their associated customers.
RBS announced yesterday that it was selling a further chunk of shares in Direct Line in a transaction that sees its stake fall below 50%, while it is frantically attempting to drum up interest in the branch network following the collapse of a deal to sell it to Santander.
Worldpay describes itself as a global leader in payment processing, operating in 40 countries and handling more than half of all card transactions in the UK through its Streamline brand.
From next month, the company will be run by Philip Jansen, a former executive with the catering group Sodexo and MyTravel, the tour operator.
Since its takeover by Advent and Bain, Worldpay is understood to have sharply increased both turnover and profits, with Mr Jansen's predecessor as chief executive saying the company had been "unshackled" by the sale.
Last October, Worldpay appointed JP Morgan, the Wall Street bank, to sell its US division, which is estimated to be worth £700m. Discussions with prospective buyers are understood to be ongoing.
A flotation of Worldpay is expected to take place in about 2016. Worldpay and Advent both declined to comment, while Bain could not be reached.