Palamon Capital Partners and Corsair Capital have agreed to acquire Currencies Direct, a provider of foreign exchange solutions. The value of the transaction is over 200 million pounds. The deal is expected to be completed before the end of the year.
Palamon Capital Partners, a pan-European growth investor, and Corsair Capital, a leading private equity investor in global financial services, today announced an agreement to jointly acquire control of Currencies Direct (“The Company”), a leading specialist provider of foreign exchange (“FX”) and international payment solutions to private and corporate clients. The transaction value exceeds £200 million.
The acquisition is structured so that Currencies Direct management will increase its ownership position in the company and will also include continuing equity participation by the firm’s principal founder, Mayank B Patel OBE, who will become Honorary President.
Currencies Direct’s Private FX segment provides foreign exchange services to more than 150,000 registered retail clients. Its Corporate FX segment offers foreign exchange services to small medium enterprise (“SME”) clients for import / export-related activities across a variety of industries, including the e-commerce segment. The Company distributes its products and services through a multi-channel distribution network, which includes a strong network of affiliate partnerships. Currencies Direct has established market presences in the UK, Continental Europe, Australia, South Africa and the US, and is well positioned to continue to expand internationally. The retail and SME FX market is worth over £3 billion in the UK alone.
The specialist segment of the foreign exchange services industry is expected to grow around twice as fast as the average for the overall industry, as retail and SME customers continue to shift away from banks for their foreign exchange needs. With its superior high touch customer service and competitive pricing, Currencies Direct is well positioned to continue to benefit from this long-term industry trend.
Keith Hatton, Chief Executive of Currencies Direct, stated, “We are excited at the prospects of working with Palamon and Corsair Capital which have demonstrated their expertise in the financial services sector. They are shareholders who underscore a strong vote of confidence in the future of our company and the strategy of the management team. Their acquisition of Currencies Direct provides our company with capital, experience and global relationships to accelerate our strategy to be a leader internationally in foreign exchange and payment processing.”
Daan Knottenbelt, Partner of Palamon Capital Partners, stated, “With its established market position, attractive margins, and exciting growth potential, Currencies Direct is a signature Palamon investment and in line with our core thematics. As experienced growth investors in the consumer-facing financial services sector we look forward to partnering with the management team to provide strategic and financial support to take Currencies Direct to the next level. Currencies Direct’s proven business model, powered by its proprietary affiliate network, positions the company ideally to capitalise further on its strong momentum in this fast growing, dynamic sector.”
Lord Davies of Abersoch, Chairman of Corsair Capital, stated, “We are extremely excited about Currencies Direct. The Company has a very knowledgeable and strong management team. As part of our ongoing review of the financial services industry’s trends and themes, we identified the specialist foreign exchange and international payments industry as a growth sector: banks tend to focus less on retail and SME customers in this area, and specialist players are therefore well-positioned to gain market share and grow significantly above the average industry growth rate. Currencies Direct’s multi-channel distribution model, including its strong network of affiliates, is a key differentiator relative to other specialist international payment providers and banking competitors. Given Corsair Capital’s extensive network of relationships with financial services groups and other institutional partners, we are confident that we can provide value-add to Currencies Direct as it grows its business.”
Mayank B Patel OBE, comments, “I am proud of what Currencies Direct has achieved over the last 20 years and am confident that, given the strength of the management team and the value added expertise of Corsair Capital and Palamon Capital, the business will continue to take advantage of the growth prospects in the sector. I am delighted I will be part of Currencies Direct future as a shareholder and Honorary President.”
The transaction is expected to close by the end of calendar year 2015 and is subject to applicable regulatory approvals and other conditions.
Advisers involved in this transaction included:
For Corsair and Palamon – Canaccord Genuity (M&A), PwC (Financial/Tax), Slaughter and May (Legal), CIL (Commercial), Willis (Insurance)
For Currencies Direct – FT Partners (M&A), Fieldfisher (Legal), BCG (Commercial), Beachcroft (Management Legal)
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 growth services companies. Palamon originates, executes and manages investments on a pan-European basis, with a particular focus on the UK, Germany, Benelux, Italy, Spain, Norway, Denmark and Sweden. The Firm targets investments in companies where it can be the lead private equity provider and where it can provide strategic direction and partner with management to help build equity value. The Firm manages funds with €1.3 billion of equity capital for investment.
About Corsair Capital
Corsair Capital, LLC, which includes a highly regarded global private equity platform, is a leading global investor in the financial services industry. Corsair has invested across a range of geographies and cycles, and in substantially all of the subsectors of the financial services industry including payments, insurance, asset management, depository institutions, and specialty finance in North America, Western Europe, and the Emerging Markets of Asia, Latin America and Central Europe. More information about Corsair Capital may be accessed through the website www.corsair-capital.com.