Transaction Capital sells Paycorp to Actis
In a deal worth R937m.
Transaction Capital today announced that it has entered into a definitive agreement to sell its wholly-owned subsidiary Paycorp to pan-emerging market private equity firm Actis. Paycorp, owned by Transaction Capital since 2006, is South Africa’s largest independent owner and operator of off-site ATMs and a deployer of Visa-certified pre-paid debit cards.
Actis will acquire the entire issued share capital of Paycorp and its subsidiaries.
Commenting on the transaction, Mark Lamberti, CEO, Transaction Capital, said:
“The proposed transaction is consistent with our stated commitment to consider disposing of a subsidiary if the performance of that subsidiary may be enhanced by another owner, as reflected in what we believe to be a premium price.”
Lamberti continued: “The value of the transaction, which represents 21.8 times Paycorp’s earnings to September 2012, anticipates the synergies and added value that would be brought to bear by leveraging Paycorp’s assets with the acquirer’s extensive payments investments including an Indian ATM network and other global payments assets. This view is shared by Paycorp’s management who have elected to co-invest with Actis. The transaction will enhance Transaction Capital’s shareholder value without in any way being prejudicial to the sustainability or to the stakeholders of Transaction Capital or Paycorp.”
“Paycorp’s inclusion in Transaction Capital has been logically justified as a cash generating component of a non-deposit taking financial services portfolio and it is an excellent business in its own right. However, the synergies between a low cost, high volume transactional ATM business and the differentiated credit risk businesses that constitute the balance of Transaction Capital’s portfolio are elusive. To date, there has been very little incremental value created expressly as a consequence of Paycorp’s collaboration with other subsidiaries of the Transaction Capital group.”
The agreement is subject to certain conditions precedent being fulfilled including the approval by Transaction Capital’s shareholders (if required), financing banks and relevant regulatory authorities. The transaction is anticipated to close by the end of December 2013