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Blackstone to invest in Currencies Direct

Blackstone has agreed to invest 140 million pounds in Currencies Direct, a provider of digital foreign exchange and international payment services to private clients and small and medium sized enterprises.

Blackstone has agreed to invest 140 million pounds in Currencies Direct, a provider of digital foreign exchange and international payment services to private clients and small and medium sized enterprises. Palamon Capital Partners and Corsair will retain their majority co-controlling stake in Currencies Direct.

PRESS RELEASE

Palamon Capital Partners (“Palamon”), a pan-European growth investor, and Corsair, a leading private equity firm targeting services, software, and payments investments in the financial services market, today announced that funds managed by Blackstone Tactical Opportunities (“Blackstone”) have agreed to make a £140 million strategic investment in Currencies Direct (the “Company”), a leading global provider of digital foreign exchange (“FX”) and international payment services to private clients and small and medium sized enterprises (SMEs). The investment will be made in partnership with Currencies Direct’s management team, led by Keith Hatton, and Palamon and Corsair (“the Sponsors”), which will retain their majority co-controlling stake in the Company. Blackstone’s strategic investment will be used to accelerate the Company’s growth ambitions through further acquisitions.

Currencies Direct is one of the largest digital FX and international payment platforms globally with £105 million in revenues and £43 million of EBITDA for the last twelve months ending January 2022. The Company focuses on high-value use cases and segments of the FX market, as well as SMEs. Currencies Direct combines a full-stack, fully-digital product offering for both consumers and businesses with award-winning customer service. Since being acquired by Palamon and Corsair in 2015, the Company has delivered more than 20% CAGR profit growth, with EBITDA increasing from £13 million to £43 million, and has successfully executed three highly accretive add-on acquisitions, leveraging its scalable, state-of-the-art technology platform and infrastructure.

In connection with its investment, Blackstone will join the Currencies Direct Board of Directors. Palamon and Corsair will retain their majority co-controlling stake in the Company and will partner with Blackstone to accelerate Currencies Direct’s organic growth ambitions and target M&A opportunities across B2B, B2B2C and B2C platforms globally.

Blackstone’s investment concludes a series of successful dividend recapitalisations over the last 12 months resulting from the Company’s continued strong performance. In January 2022, the Company completed a £235 million senior refinancing with Pemberton Asset Management, which followed a March 2021 £165 million refinancing.

Keith Hatton, CEO of Currencies Direct, commented: “We are pleased to welcome Blackstone as a strategic investor alongside our long-term partners Palamon and Corsair. We are confident Blackstone’s expansive resources and expertise will help fuel our growth as we build on our significant momentum. Together with Palamon and Corsair, we have built a successful, sustainable, and innovative business with the knowledge, technology, and global footprint required to deliver best-in-class digital FX and international payment services.”

Qasim Abbas, Senior Managing Director at Blackstone, said: “We are delighted to invest in Currencies Direct, a leader in FX payments with an impressive track record of strong, continuous growth and a cutting-edge, scalable technology platform that can be leveraged to integrate and capitalise on the significant consolidation opportunities in the market. We look forward to working with the Company in partnership with Palamon and Corsair to find attractive M&A targets that can promote the expansion of Currencies Direct’s platform and further enhance its solutions for customers.”

Ali Rahmatollahi, Partner at Palamon, commented: “Currencies Direct has more than tripled EBITDA during our ownership to become one of the undisputed and most successful leaders in digital international payments in its core verticals. We have returned substantial capital back to our investors through this investment and are excited to be able to maintain significant exposure to the next phase of its development. We have step-change projects underway, the market opportunity is massive, and we continue to see an open runway for growth acceleration, both organically and through M&A. As such, we are delighted to partner with Blackstone to continue supporting the Company with added firepower to execute on those expansion opportunities.”

Derrick Estes and Raja Hadji-Touma, Partners at Corsair, said: “We continue to believe there is tremendous opportunity for innovation and expansion in the FX and payment processing industry globally and are highly confident in Currencies Direct’s ability to extend its position by leveraging its strong customer value proposition, differentiated client acquisition strategy, and scalable technology platform. After many years of strong growth and execution under Keith’s leadership, we are excited to welcome Blackstone as a partner to enhance Currencies Direct’s growth plans by identifying attractive, value-accretive acquisition targets, especially in B2B and B2B2C.”

The transaction is expected to close by the end of the first quarter of 2022.
William Blair acted as financial advisor and Slaughter & May acted as legal advisor to Currencies Direct, Palamon and Corsair. FT Partners and EY LLP acted as financial advisor and Simpson Thacher & Bartlett LLP acted as legal advisor to Blackstone.

About Palamon Capital Partners
Palamon Capital Partners, LP is an independent private equity partnership founded in 1999, which is focused on providing equity for European growing asset-light service companies, investing across tech-enabled financial services, tech-enabled B2B & healthcare and consumer & education. Palamon originates, executes and manages investments on a pan-European basis, with a particular focus on the UK, Germany, Benelux, Italy, Spain, Norway, and Sweden. The Firm targets investments in companies where it can be the lead, or joint lead, private equity provider and where it can provide strategic direction and partner with management and entrepreneurs to help build equity value. For more information, visit www.palamon.com