Investcorp makes 8x on online payment business

CVC’s €600m purchase of Skrill comes just days after it invested €800m in Domestic and General and entered exclusive talks to acquire Campbell Soup's European business.

Bahrain-listed Investcorp has sold a majority stake in online payment business Skrill to CVC Capital Partners for €600 million, according to a statement.

A source close to the matter told Private Equity International CVC acquired a 75 percent stake, while Investcorp retained the remaining 25 percent in the company.  

The sale, which is subject to competition clearance and regulatory approval, is understood to have generated a return of 8x for Investcorp, according to another source.

CVC and Investcorp declined to comment on financial details.
 
The company was sold through an auction process run by Barclays and attracted “meaningful interest from many of the large private equity players”, Hazem Ben-Gacem, head of Investcorp’s European Corporate Investment Team, told Private Equity International.

Skrill is a European payment system business that enables customers to send and receive money, as well as make online payments. The business, which offers 100 payment options in 200 countries and territories and 40 currencies, has over 36 million account holders. 

Investcorp invested €25 million in the business in 2007; since then, the company's revenues and EBITDA have grown to over €200 million and €50 million respectively, from €7.8 million of revenues and an EBITDA of €3.7 million in 2007. 

Investcorp has “aggressively grown the business internationally and in many large markets like North America”, Ben-Gacem said. “We have diversified the business, increasing the company’s exposure to online gaming and digital media markets such as Skype. We also expanded into the prepaid payments business through the acquisition of Safe Card, paysafecard.com,” he said. 

If we look across the European technology and venture capital market, it has been a bit disappointing in terms of returns and this is a good example of a very European originated technology business yielding a very successful outcome both in terms of operational growth and returns

Hazem Ben-Gacem

“If we look across the European technology and venture capital market, it has been a bit disappointing in terms of returns and this is a good example of a very European originated technology business yielding a very successful outcome both in terms of operational growth and returns,” he added. 

The deal comes a few weeks after Investcorp acquired UK crisps maker Tyrrells for £100 million (€115 million, $151 million). In April, Investcorp sold Armacell, a manufacturer of technical insulation materials, to Charterhouse Capital Partners for more than €500 million. In February, the firm bought Hydrasun, a provider of fluid control equipment and solutions for the oil and gas sector from Equistone Partners Europe. Last November, Investcorp netted a more than 2.1x return on the divestment of trailer parts distributer FleetPride.  

For CVC, the investment marks the third deal in a week. Last week, CVC entered exclusive talks with Campbell Soup Company to acquire its European business. The deal is in “the final agreement stage”, according to a source. Days later, it acquired Domestic and General, a domestic appliances warranty specialist, from Advent International for €800 million. 

CVC used its fifth fund, a €10.75 billion, 2005-vintage, for this transaction. The vehicle is understood to be approximately 80 percent deployed. CVC recently closed the successor fund on its €10.5 billion hard-cap. 

Jefferies was the sole advisor to CVC. The bank said its European TMT team had now advised on 19 M&A transactions since the start of last year.