“A truly impressive case” is how judge Katja Salovaara, a senior portfolio manager at Ilmarinen, describes Nordic Capital’s investment in payments business Bambora. She highlights the GP’s vision and use of its strong sector expertise and networks “to create a payments powerhouse with an end-to-end offering for the mid-market distributed on a global scale”.
Having mapped out the payments space and looked at several assets, in May 2014 Nordic Capital Fund VIII secured the carve out of Swedish bank SEB’s payment division, Euroline. “We had a long dialogue with the seller,” says Fredrik Näslund, partner at Nordic Capital. “We convinced SEB that Nordic Capital was the right owner and would invest into the products and the people.”
The Bambora brand launched a year later focused on an underserved segment of small and medium-sized merchants demanding digital and cross border services. “The platform [acquisition] didn’t have an end-to-end offering. We had a vision to create a new type of player that would change the payment landscape and bought a number of adjacent companies, the products Euroline was missing,” says Näslund.
These included three deals secured during the buyout. In the course of Nordic’s ownership, during which it invested €55 million into products and sales, Bambora completed a total of 13 add-ons and expanded its geographic coverage across the Nordics, Switzerland, US and Australasia.
Nordic appointed familiar face Johan Tjärnberg, the ex-chief executive of payment business Point that the firm acquired in 2004 and exited in 2011, to head up an entirely new leadership team.
“Since Euroline was a carve-out, we had to support the incoming management team with significant resources, especially on the financial side and IT and invested heavily in products, some through add-ons and also through adding development resources,” says Näslund. The number of IT engineers rose from four at entry to 200 over the course of the investment, he says. “And we were smart about using modern technology such as the Amazon cloud for hosting, which was very cost efficient.”
The team undertook “significant work on customer needs”, says Näslund, interviewing thousands of customers. “We invested in commercial excellence, added sales resource and segmented the market. Then we focused on customer support, where resources were also added.”
Digitisation slashed the customer onboarding time from weeks to minutes. Intake soared to around 3,000 new customers a month, up from around 200 at entry. At the same time, staffing levels increased from 50 to more than 700 people, of which more than half were directly recruited.
In just two years, annual revenues reached €200 million. By exit in July 2017, organic net revenue growth had accelerated from zero at entry to 30 percent, and profits had tripled. With 110,000 customers in 70 markets, Bambora was processing transactions totalling around €55 billion a year – a five-fold increase.
The business was sold to payments business Ingenico Group for €1.5 billion after just 30 months. The speed and extent of the transformation were truly impressive. Salovaara agrees. Nordic Capital’s engagement with Bambora shows “exceptional execution with investments in products, capabilities and organisation”, she says.