Duke Street has agreed to acquire a 69% stake in Payzone Group, a UK-listed payment acceptance company. The deal values Payzone at €104 million. Duke Street will invest 45 million in equity, while Payzone’s seven lenders will become shareholders — as part of a restructuring that will cut the company’s senior secured debt from approximately €300 million to €77 million.
Duke Street announces today that it has agreed to acquire a 69% shareholding in the Payzone Group, Europe’s largest consumer payments acceptance network, at an Enterprise Value of €104m, as part of the AIM-listed company’s financial restructuring.
The Payzone Group comprises two businesses, Payzone (formerly known as Alphyra) and Cashzone (formerly known as Cardpoint). The Payzone business manages terminal networks in the UK, Ireland, Sweden, Greece and Romania, which process a variety of electronic transactions. The main services include mobile phone top-up, utility top-up, bill-payment solutions, electronic-gift vouchers and Electronic Funds Transfer (EFT) processing. The Cashzone business deploys branded independent ATMs in the convenience sector in the UK and Germany.
Duke Street sees attractive opportunities to grow both Payzone and Cashzone thereby further strengthening the leading market positions they already hold in their respective markets. In Payzone the growth is expected to come from launching new payment services, such as cash-less parking and prepaid cards, and targeted complementary acquisitions. The independent ATM markets in both the UK and Germany are fragmented and Cashzone is well placed to lead a consolidation of the sector. In addition there may be opportunities to selectively expand the ATM networks in both countries.
The financial restructuring reduces Payzone’s level of senior secured debt from approximately €300m to €77m. As part of the process, Payzone’s seven bank lenders, will become shareholders in the restructured group. Duke Street’s €45m equity investment provides significant growth capital to develop the business.
Payzone plc’s management team, led by Chief Executive Mike Maloney, will remain with the business and become shareholders. They will work closely with the Duke Street team to execute the growth strategy for Payzone. Duke Street Operating Partner Bob Scott (former Group CEO of Aviva) will become Chairman of Payzone on completion.
Commenting on Duke Street’s investment, Charlie Troup, Partner, said:
“This opportunity plays extremely well to Duke Street’s key strengths of driving operational transformation, providing strategic input to management teams and providing long-term capital for growth. We have followed the business and the sector for some time and we see significant potential for development in Payzone’s core sectors and markets. The successful conclusion of the Group’s financial restructuring will accelerate growth and provide a platform to generate attractive returns.”
Mike Maloney, Chief Executive of Payzone, said:
“My team and I are delighted to be working with Duke Street as the majority shareholder in ‘new’ Payzone. The firm’s hands-on approach and good understanding of both our business and sector make it an ideal partner with which to grow the business, now that our balance sheet issues have been resolved.”
Duke Street was advised in this transaction by Hawkpoint, SJ Berwin and Deloitte.