Manchester payments business changes hands in £156m disposal

Jon Lewis

A deal has been agreed for the disposal of Manchester-based payments business, Pay360, by digital services business Capita.

The sale, which needs to be approved by Capita’s shareholders, values Pay360 at £150m, but Capita says, taking into account cash-like and debt-like terms, it expects to receive gross proceeds of around £156m on completion of its deal with Access PaySuite, a division of The Access Group, which has offices in Birkenhead and Stockport.

Capita says the sale represents a 14.3x multiple on 2021 EBITDA of £10.5m. The sale will help reduce its debt and provide additional liquidity, which, together, will further strengthen Capita’s balance sheet, while also allowing it to enhance its digital offerings for clients.

The sale of Pay360 is a Class 1 transaction and is conditional on the approval of Capita’s shareholders, notification and confirmation from the Secretary of State that no further action will be taken under the UK’s National Security and Investment Act, and change in control clearance from the Financial Conduct Authority. These conditions are currently expected to be satisfied towards the end of 2022.

Pay360 is an FCA-regulated payments business with around 2,500 customers across the public and private sectors.

It offers its customers gateway and acquiring services, as well as payment solutions across the payments value chain.

It has recently expanded its capabilities into payment facilitation with the launch of its Evolve platform. In 2021, the business processed £8.6bn in transaction value across 142 million transactions.

The gross assets of Pay360 at June 30, 2022, were £63.6m, and for the year to December 31, 2021, it generated revenue of £45.8m, EBITDA of £10.5m and profit before tax of £7.1m.

For the first half of 2022, Pay360 generated revenue of £27.3m, EBITDA of £5.7m and profit before tax of £3.1m. The Pay360 senior management team will be transferring with the business.

The sale of Pay360 follows a strategic review of the business by Capita and represents further progress in its strategy to build a more focused, sustainable business for the long term.

Capita chief executive, Jon Lewis, said: “We are pleased to have agreed the sale of Pay360 to Access.

“The sale is a great opportunity for the new owners to help Pay360 realise its full potential, and our colleagues at Pay360 will also benefit from the focus that this change of ownership will bring. Capita will utilise the cash proceeds of the sale to benefit our digital offerings for clients and further reduce net debt.

“The Pay360 senior management team and employees will remain with the business as they transfer to new ownership.”

Barclays Bank, acting through its Investment Bank is acting as sole financial advisor and sole sponsor to Capita on the transaction.

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