UK buyout firms pick up business

UK buyout firms pick up business

London: Two buyout firms, Warburg Pincus and Permira, announced deals involving European financial services companies, a further sign of the return of dealmaking in the private equity market.

Warburg Pincus said on Friday it was to sell German payment service provider easycash to French rival Ingenico in a deal worth €290 million ($426 million).

Permira said it had agreed to buy British life insurer Just Retirement, which sells investment products to people in, or approaching, retirement, in a £230 million ($367 million) all-equity deal.

“Assuming shareholders approve the offer, this will be the second new investment by Permira this year and shows that, even in a difficult market, there are opportunities," said James Fraser, head of Permira’s financial services team.

Widely-available debt for deals dried up in the wake of the credit crisis, forcing private equity firms to write larger equity cheques to secure acquisitions.

But there are signs lender appetite is returning for deals in defensive sectors.

Ingenico’s acquisition of easycash is backed by a €270 million club deal banking facility, including a 210 million term loan and 60 million for working capital needs, the company said in a statement.

A source familiar with the process said Warburg Pincus had tripled its initial investment in easycash since 2006.

There are widespread concerns that companies bought by private equity firms before markets crashed are now worth significantly less than was paid for them.

Easycash, however, joined a trickle of profitable exits, including a binding bid for Blackstone and Lion Capital’s Orangina Schweppes, earning them twice their initial $600 million equity investment. Montagu doubled its investment on sausage casings maker Kalle.

Permira bid vehicle Avalon will pay 76 pence per share for Just Retirement and will inject £25 million into the company, it said. The deal includes a securities alternative, allowing shareholders to take non-listed units in exchange for their shares.

The price was 9.4% above Thursday’s close but almost half the 148 pence that the company floated at in November 2006.