Exponent nets 4x on Fintrax sale

The UK-based firm has sold the provider of VAT refunds for tourists to listed French investment firm Eurazeo in a deal valuing the business at €550m.

UK-headquartered Exponent Private Equity has sold Fintrax Group, a global provider of tax-free shopping and dynamic currency conversion services, to French-listed investment firm Eurazeo in a deal valuing the business at €550 million, according to statements from the firms.

Eurazeo will invest €300 million for a 90 percent stake in Fintrax, the parent company of Premier Tax Free which helps international travellers claim back VAT on retail purchases. The remaining 10 percent stake will be held by the management team. A further €35 million is payable dependent on 2016 performance, which would take the enterprise value up to €585 million. 

Founded in Ireland in 1985, Fintrax operates in 30 countries, serving 14,000 retail merchants with more than 150,000 points of sale generating around €5 billion of eligible tax-free sales annually. Its clients include luxury brands such as Chanel, Gucci, Michael Kors and Ralph Lauren.

It is also active in the dynamic currency conversion market, which allows international travellers to pay for goods and services in their own currency in shops, hotels and restaurants.

Exponent acquired the business in 2012 for €170 million using equity from its 2008-vintage £805 million (€1.15 billion; $1.22 billion) second fund. During its ownership the firm strengthened the management team, invested in Fintrax’s technology and expanded into new geographies, resulting in an EBITDA increase of more than 250 percent, the firm said.

“We have already begun to see the benefits of our investment into technology, particularly card recognition and mobile, as well as the decision to expand Fintrax into new territories in northern Europe,” Exponent partner Mark Taylor said.

Following the sale Exponent Private Equity Partners II has four remaining investments, including Loch Lomond, UK handbag brand Radley, Immediate Media and aircraft replacement parts distributor Pattonair.  

According to Eurazeo, Fintrax’s growth strategy is mainly focused on geographic expansion, particularly in Asia, and further development of dynamic currency conversion, especially outside Europe and into adjacent markets within the DCC segment.

“We are convinced that our experience in the luxury retail and travel and leisure sectors, as well as our international network, notably in China and Brazil, will be major assets in the acceleration of the development of the company,” Eurazeo managing director Marc Frappier said.

Eurazeo has offices in Shanghai and in São Paulo to assist in developing portfolio companies in Asia and South America.

In April, Exponent closed its third fund at £1 billion, exceeding its £800 million target. Exponent put in a GP commitment of 2 percent, Richard Lenane, a senior partner at Exponent told Private Equity International. Campbell Lutyens acted as exclusive global placement agent for the offering.

The fund will invest in UK-based businesses operating in the upper mid-market, targeting companies with enterprise value between £75 million and £350 million operating in a broad range of sectors and markets.

In February, Exponent listed HSS Hire Group on the London Stock Exchange having owned the business since 2012, while in January the firm sold Trainline, a UK-based online retailer for rail tickets, to KKR for £425 million-£450 million.

Eurazeo has completed six transactions since June 30, offloading Cap Vert Finance and making five investments, including acquiring a stake in French investment company Capzanine, a provider of mixed capital and private debt financing to French SMEs, and investing in Flash Europe, a European premium freight business.

As at 13:30 Eurazeo shares were trading down 0.79 percent at €62.46 per share, giving the firm a market capitalisation of €4.57 billion.