PE HUB Wire Highlights, 9.16.19

Accel-KKR close $1.38B deal for more time to manage 2008 fund; Linden, Audax invest in Frazier’s HOPCo; Banks losing $280M in payments revenue

We’re back to a new work week, Hubsters. How is everyone?

I can’t remember the last time I went into a bank. But such financial institutions are expected to miss out on $280 billion in revenue due to the rise of digital payments and competition from non-banks. That’s according to a report from Accenture, which found that global payments revenue will likely grow by 5.5 percent annually and are expected to hit more than $2 trillion in 2025, from $1.5 trillion in 2019.

Accenture polled 240 retail and corporate payments executives. The consulting firm found that two-thirds, or 71 percent, agreed that payments are becoming free, while nearly three-quarters (73 percent) think that most payments are already invisible or will become so over the next 12 months. Worse, 78 percent of executives questioned said that payments are either already instant or will become instant over the next 12 months, Accenture said.

“Rather than being at the forefront of the new wave of the booming payments market, banks are feeling the heat from new competition and seeing their margins squeezed,” said Gareth Wilson, Accenture’s global payments lead. Banks are facing an “inevitable world of instant, invisible and free payments,” he said. Those banks that don’t adapt will be left behind.

Hubsters, I’ve often been told that banks are a treasure trove of outdated technology. But they have the customers that everyone wants. Banks need to change how they do business to survive, Accenture said. By adopting innovative business models, banks can tap into $500 billion in opportunities. This is a great conclusion but how can banks do it? More importantly, will they do it? Does this mean more acquisitions? Hubsters, what are your thoughts? Email me at lbeltran@buyoutsinsider.com.

Deals: Mosaic Acquisition Corp, the blank check company from David Maura, is buying Vivint Smart Home in a deal that will create a merged company with an initial enterprise value of approximately $5.6 billion. Vivint provides smart home products and cloud-enabled services to 1.5 million subscribers across 98 percent of the zip codes in the U.S., and in Canada. Blackstone is investing $100 million in cash, while Fortress Investment Group is providing $125 million cash.

Blackstone has agreed to buy Dream Global REIT in a deal valued at C$6.2 billion ($4.7 billion). Dream Global, of Toronto, owns and operates a portfolio of office and industrial properties located in Western Europe with a focus on Germany and the Netherlands.

Correction: A prior version of the PE HUB wire said Accel-KKR is getting more time to manage four remaining investments from its vintage-2008 third fund. The deal is valued at $1.38 billion, not $1.8 billion. The story has been changed.

CONTINUE READING