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RBS sold WorldPay for £2bn in 2010. WorldPay now set for £6bn IPO.

Derek du Preez Profile picture for user ddpreez June 4, 2015
Summary:
WorldPay is preparing to float in London for £6bn, according to reports. RBS sold it for £2bn just five years ago.

worldpay
Questions are likely to be raised about the long-term effectiveness of Royal Bank of Scotland's bail-out agreement with the European Commission, after it has been revealed that one of the businesses it was forced to sell off as part of the state-aid deal – WorldPay – has tripled in value in just five years.

Sources have told Reuters that Europe's largest payments processor is hiring banks and preparing for a London floatation, which would value the business at £6 billion, propelling it into the FTSE 100.

RBS sold WorldPay to private equity firms Advent International and Bain Capital in 2010 for £2 billion.

Some of the banks reportedly involved with preparing WorldPay for its IPO include Goldman Sachs, Morgan Stanley, Barclays, Credit Suisse and UBS.

WorldPay offers a secure platform for businesses of all sizes to process their payments. With the growth in digital methods of payment, such as contactless, online and mobile, the underlying platforms are becoming increasingly important in the digital commerce landscape, which goes some way to explaining the company's strong valuation.

For example, WorldPay recently detailed how it has processed over £2 billion of contactless payments since January 2012 and has also issued numerous releases about its role in the surge in online payments.

Equally, in November last year WorldPay announced that it had entered into a definitive agreement to acquire SecureNet Payment Systems, which focuses on multi-channel commerce technology by using a cloud solution that integrates point-of-sales systems, mobile and e-commerce payments processing.

WorldPay's results have also been strong in recent years, with the most recent half-yearly revenues reported at £1.73 billion to the end of June 2014, which was up up 6.1 percent.

Royal Bank of Scotland
However, whilst this growth, excitement and high valuation are likely to be extremely pleasing to WorldPay's owners, it is also likely to be somewhat annoying news for RBS, which is still reporting multi-billion losses after it was saved by taxpayer cash during the financial crisis.

Part of the stat-aid agreement with the European Commission required that RBS sell off some of its more valuable assets. For example, at the time RBS also sold insurer Direct Line for £1 billion -  which then too went on to IPO and at the time of the floatation had a market value of £2.63 billion.

WorldPay's value, versus the struggling balance sheet at RBS, may raise some questions about the long-term strategic vision of the European Commission deal.

My take

Good news for WorldPay and for the technology scene in London, which is becoming increasingly viewed as a hotbed for 'fintech' specialist companies.

Bit annoying for RBS, but at the time of the financial crisis and the bail out of the bank, sales were needed and WorldPay was a lucrative asset. C'est la vie.

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