Private equity owners of British payment processing company warned against backing bid from rival French firm due to risks involved
The planned £6bn flotation of Worldpay is back on track after one of its private equity backers warned of the risks of backing a bid from French rival Ingenico.
Bain Capital, one of the two main backers of the British payment processing company, is becoming increasingly nervous about agreeing to a deal with Ingenico. It believes the risks attached to such a transaction are high, given that the French group would be doubling its market capitalisation to do the deal. It would also need shareholder approval.
“The Ingenico share price is under pressure as investors worry about whether it can pay a sufficiently high price and still make the deal work,” said a source close to Bain. Ingenico’s share price has fallen from €125 to €98 over the past month as its interest in a deal has been made known.
One of the bank advisers advising on the deal has also argued that a stock market flotation offers the group greater certainty, despite the risks of higher interest rates.
Bain Capital and Advent, the private equity owners of Worldpay, were scheduled to announce details of the £6bn share issue this week but postponed the announcement last Friday as Ingenico showed signs of wanting to increase its bid.
Sir Mike Rake, the Worldpay chairman, left the board of Barclays bank in order to steer Worldpay to the public markets. This time last year he chaired roadside assistance group, the RAC, as it prepared for a flotation but left when the Singapore wealth fund GIC bought a stake instead.
Some of those advising Worldpay on a flotation have cautioned against the current instability of the markets and the possibility of them being further shaken by a rise in US interest rates.
However, they also know that agreeing a deal with Ingenico is not without considerable risk.
Investment bankers are hoping that a £6bn flotation would help kickstart the new issues market in London, which has been relatively quiet since the election and the summer months, also troubled by the turmoil on the China markets.
So far there have been 53 UK issues this year, compared with 93 at the same time last year, according to Dealogic. Some of the large flotations this year have included DFS Furniture in February, which had a valuation of £585m, and Autotrader, which was valued at £2.35bn.