RBS to sell WorldPay stake

WorldPay to be sold

The Royal Bank of Scotland has reportedly finalised a deal to sell over 80 percent of their stake in WorldPay payments processing unit to two private equity firms - Bain Capital and Advent International.

It is reported that RBS's stake is worth up to £2.025 billion including a £200 million contingent consideration. However the financial institution will retain a 19.99 percent stake in WorldPay.

If the deal does go through, it is believed that RBS will get around £1.7 billion in cash on closing of the sale of the 80.01 percent interest and up to another £200 million in the future if the returns realised meet certain expectations from the firms.

It is expected the deal will be finalised by the end of the year and after including goodwill, separation and transaction costs could see an RBS gain of £850 million.

Conditional sale

RBS's decision to sell their WorldPay assets (or Global Merchant Services) comes as part of a condition from the European competition authorities to join the UK government's asset protection scheme as the institution suffered during the recession.

When it was announced that RBS would be selling 80 percent of their WorldPay assets, who are the world's fourth largest provider of card payment services, it announced over a dozen offers from private equity groups, payment processors and IT vendors all in the frame.

As electronic transactions become more and more popular all over the continent, WorldPay would become a lucrative purchase for anyone looking to take advantage of the e-banking and m-banking growth.

Bruce Van Saun, group finance director, RBS, says: "The sale of GMS is another significant milestone in the Group's restructuring programme. GMS is an excellent business. The transaction will be good for both staff and customers as the business implements its ambitious expansion plans."

RBS has not had a good first year - the company posted a mere first half net profit of £9 million. However, this is a massive step up from last year's period loss of £1.04 billion.

Relevant articles:

Citigroup to sell Egg bank | Northern Rock makes profit | Are UK banks ripping off their customers? | RBS fined for IT system failure

Like this article? Get the RSS feed: