Palamon sells Australian businesses for €243 million

Palamon sells Australian businesses for €243 million

Palamon Capital Partners, a European mid-market private equity firm, today announced the sale of the Australian business units of its portfolio company, Retail Decisions (“ReD”), for AUS$353 million (€243m, £139.6m) to the US fleet and corporate card specialists, Wright Express Corporation, a New York Stock Exchange listed company. Completion of the transaction is subject to regulatory approvals.

ReD is a payment processing and payment fraud prevention provider headquartered in the UK. It was bought by Palamon in December 2006. Since Palamon’s investment, ReD has delivered strong growth performance, building on its market positions. The Australian businesses being sold comprise ReD Fuel and ReD Prepaid.

Divesting Aussie fuel cards

ReD Fuel is Australia’s largest multi-branded fuel card issuer with 270,000 cards in circulation and their fleet cards are accepted at 90% of Australian fuel retailers. ReD Prepaid is the market leading processor of prepaid cards in Australia with approximately 60% market share. The revenue of the combined business units is AUS $58m (€40m, £33m) and has grown 30% during Palamon’s period of ownership of the business, according to the firm.

Proceeds from this transaction will be used to repay all of ReD’s debt and to make a distribution to shareholders. Palamon and its co-investors, Morgan Stanley Alternative Investment Partners and AlpInvest Partners, will receive a payment equivalent to substantially all of the initial investment and will retain their controlling ownership in ReD.

This transaction follows the sale last year of ReD’s UK fuel card business. Following the sale of the Australian businesses, ReD will consist of payment fraud prevention and processing business active in Europe, the Americas, Asia-Pacific and South Africa.

Making a return on investment

Fabio Massimo Giuseppetti, a partner at Palamon Capital Partners, stated: “We are delighted to announce the sale of ReD’s market leading Australian fuel card and prepaid card businesses. This transaction allows Palamon to return substantially all of our investment in ReD to investors. This is Palamon’s third exit in 2010 and with this transaction Palamon will have realised aggregate proceeds on its investments this year to date in excess of €170 million [€141m].”

Jaime-Enrique Hugas, a principal at Palamon Capital Partners, said: “This transaction is a great outcome for Palamon, ReD and the management and employees of the Australian businesses. Following this transaction, we will continue to build out ReD’s fast growing payment fraud prevention business by penetrating new markets and customer sectors.”

Carl Clump, group chief executive of ReD, added: “We are proud of the growth and market leadership that ReD Australia achieved. Under ReD’s management ReD Fuel moved from being the third largest Australian multi-branded fuel card to being the market leader and achieving profitability increases of over 15-fold. Similarly, ReD Prepaid grew from a small loss making business to a profitable and rapidly growing one with a dominant market share. I now look forward to continuing to work with Palamon as we accelerate our ambitious growth plans for our payment fraud prevention business.”