Nets A/S: Nets announces intention to launch an Initial Public Offering

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This announcement does not constitute an offering circular and nothing herein contains an offering of securities. No one should purchase or subscribe for any securities in Nets A/S (Nets or the Company) except on the basis of information in any offering circular published by the Company in connection with the potential offering and admission of such securities to trading and official listing on Nasdaq Copenhagen A/S (Nasdaq Copenhagen). Copies of any such offering circular will, following publication, be available at the Company's registered office and, subject to certain exceptions, through the website of the Company.

Nets announces intention to launch an Initial Public Offering

Nets, a leading provider of digital payment services and related technology solutions across the Nordic region, today announced its intention to launch an Initial Public Offering (IPO or Offering) of its shares and to list on Nasdaq Copenhagen.

The intended IPO is expected to consist of an issue of new shares to raise proceeds of approximately DKK 5.5 billion and a partial sell-down of existing shares by the current Nets shareholders. Together with amounts drawn under a new banking facilities agreement to be put in place subject to the IPO, the Company's proceeds from the Offering are proposed to repay existing debt. The total offer size will be announced in connection with the publication of a prospectus by the Company.

Nets is currently owned by certain funds managed by Advent International Corporation (the Advent Funds) (43.5%); certain funds advised by Bain Capital Private Equity (Europe) L.L.P (the Bain Capital Funds) (43.5%); ATP, through its investment vehicles, ATP Private Equity Partners and Via Venture Partners, (jointly referred to as ATP Investment Vehicles) (5%); with the balance held by other co-investors, members of Nets management and employees.[1]

Bo Nilsson, CEO of Nets, said:
The IPO of Nets is the next step in the development of the Nets group following a period of rapid growth and considerable investment, during which the business has been transformed. Nets is now a highly commercial, customer-centric, innovative leader in the fast-growing digital payments space. We believe these changes, combined with our unique business model and the exceptional efforts from our employees, make us a company well placed for long-term future growth and a compelling story for potential investors.

Inge K. Hansen, Chairman of Nets, said:
Nets is at the centre of the digital payments ecosystem in the Nordic region. We have a highly experienced management team, which has delivered strong revenue growth and repositioned the business through a combination of operational improvements and significant investment in both existing and new products. We are excited about the opportunity for new investors to participate in Nets' future journey and would like to thank our customers for their continued support. We are proud to be a Nordic market leader in digital payments, and our planned IPO is the next step in our development to create a Nordic champion.

James Brocklebank, a Managing Partner at Advent International and member of the Nets Board of Directors, said:
We are delighted with the progress Nets has made over the past two years. Management, together with a highly motivated team of employees, has done an outstanding job of transforming the company into a fast-growing, innovative market leader. When we made our initial investment, we envisioned a future listing when Nets was ready. The company has exceeded its ambitious performance targets and done so faster than expected, so we are now executing on our plan. We believe Nets has significant growth potential as a public company and look forward to continuing our relationship as major shareholders.

Robin Marshall, a Managing Director at Bain Capital Private Equity and member of the Nets Board of Directors, said:
Our ambition when we invested in 2014 was to help build the Nordics Payments Champion and it's clear that Nets is now not only that but one of the best payments companies in the world. Reliability and security have been our top priorities, but we've also helped management to build an efficient business with a scalable platform and relentless focus on innovation and customers. These are hugely valuable qualities that have accelerated the company's growth in an increasingly regulated, competitive and consolidating global payments industry.

Carsten Stendevad, CEO, ATP, said:
The transformation of Nets has exceeded our expectations by far and has been a very lucrative investment for our pensioners. We look forward to supporting Nets in the next phase and we will continue as shareholders.

Information on Nets
Nets is a leading provider of digital payment services and related technology solutions across the Nordic region. Nets sits at the centre of the digital payments ecosystem and operates a deeply entrenched network which connects merchants, corporate customers, financial institutions and consumers enabling them to make and receive payments as well as, increasingly, utilise value-added services to help them improve their respective activities.

Many of Nets products and services are mission-critical for commerce in the region and supported by an advanced pan-Nordic digital payment infrastructure. Additionally, the public identity network in Denmark, NemID, and a leading identity network in Norway, BankID, are fully dependent on Nets' reliability. Nets has been instrumental in developing a modern payment infrastructure over the last 50 years. Nets' Danish and Norwegian predecessor companies (PBS in Denmark and BBS and Teller in Norway) developed and launched transformative products and services that have since become market standards and household brand names for consumers, merchants, corporate customers and governments in the region. These products and services include Dankort, Betalingsservice and NemID in Denmark, and BankID, Avtalegiro and BankAxept in Norway. In recent years, Nets has further enhanced its infrastructure and its products and services to support efficient commerce in the region, and has focused on security, reliability and stability, including real-time clearing, continuous developments in fraud prevention, improved e-commerce offerings, support for contactless payment cards and mobile solutions.

Nets' customer-facing activities are organised into three business segments:


Merchant Services provides in-store, online and mobile payment acceptance solutions to merchants across the Nordic region from large corporate chains to small and medium-sized enterprises and micro-merchants. Merchant Services has a customer base of more than 300,000 merchants including 30,000 online merchants.

Financial & Network Services, which provides outsourced processing services to more than 240 issuers of payment cards, primarily banks, in the Nordic region as well as complementary services including card management systems, fraud and dispute solutions, and mobile wallet technology. In 2015, Financial & Network Services processed transactions for more than 35 million cards. Nets also operates and processes the national debit card systems in Denmark and Norway, Dankort and BankAxept.

Corporate Services, which comprises Nets' account-based payments business and provides the payment platform for recurring payments and credit transfer transactions for more than 240,000 corporate customers, primarily in Denmark and Norway. At the centre of this business is the ability to provide seamless and integrated solutions for recurring payments to corporate customers and consumers. This business also includes solutions for real-time clearing and settlement, which provides for instant payments across bank accounts, Digital ID and value-added digitisation services.

Nets employs approximately 2,400 employees in six countries (Denmark, Norway, Finland, Sweden, Estonia, and Latvia). In the year ended 31 December 2015, Nets processed approximately 7.3 billion card transactions in the Nordic region through its business relationships with more than 300,000 merchants and 240 banks. Nets also has contracts with more than 240,000 corporate customers for payment services and manages over 8 million digital identities.

The foundation for Nets as it is known today was the merger in 2010 between Danish payments company PBS Holding A/S and Norwegian payments company Nordito AS.

Transformation Programme - 2014-16
Nets was acquired by the Advent Funds, the Bain Capital Funds and the ATP Investment Vehicles in July 2014 from the previous shareholders, consisting of 186 primarily Danish and Norwegian banks, through an acquisition of the parent operating company of the Nets group, Nets Holding A/S. The acquisition followed a review of Nets' strategic alternatives by the previous Board of Directors. The previous Board recognised that the highly complex bank ownership structure made it increasingly difficult to make the investment and rapid strategic changes needed to ensure Nets' long-term success and concluded that a new owner would be best placed to provide the financial and operational resources to develop the business and support its future growth.

Nets operates in a highly competitive international industry that is undergoing significant change. The payments sector is characterised by increasing competition, globalisation, consolidation and regulation. Scale, efficiency, innovation, technology capabilities and customer focus are key success factors for payments companies in the current environment. To remain competitive, Nets needed an effective corporate governance structure and streamlined decision-making, with a commitment to make necessary investments in IT and technology so the business could become more market-oriented, commercial and customer-focused.

Since Nets was acquired, the Advent Funds, the Bain Capital Funds and ATP Investment Vehicles, have emphasised the following strategic initiatives that form the basis of Nets' transformation programme: (i) an increased emphasis and organisational focus on Nets' customers and their needs so as to drive increased commercialisation across the business; (ii) enhancing the Merchant Services business through growth initiatives (including e-commerce), product development, strategic acquisitions in high growth areas and increased focus on customer retention; (iii) a focus on strategic investment in Nets' technology platforms to both strengthen the stability and security of the core platforms (including an approximately three times increase in spending on information security in the last two years) and also enable enhanced product innovation and a faster time to market; and (iv) promoting significant recurring cost savings and operational efficiencies.

Nets today
Nets is a different company to the one that was acquired in 2014. Following a period of significant change and considerable investment, Nets is now:

A growth company

Prior to the sale in 2014, Nets' revenue grew only marginally. Although the Nordic payments market was growing, Nets was unable to capitalise effectively on that growth. Following the transformation of the business, Nets has succeeded in achieving organic revenue growth of 6% both in 2015 and the first six months of 2016, and has built an increasingly attractive customer proposition. Nets has also increased the number of processed card transactions by 16% from 6.3 billion in 2013 to 7.3 billion in 2015.

More efficient

Nets has become a more cost-effective, streamlined organisation by applying a simple and more market-oriented organisational model, reducing role duplication, enabling the business to invest more heavily in security, innovation and highly selective bolt-on acquisitions. 

More innovative with a host of new products.

Nets has significantly enhanced its technological expertise, reduced its time to market considerably and launched a series of new products and services, including new e-commerce solutions, contactless Dankort, Betalingsservice App and real-time clearing. The key to this innovation has been the considerable investments made in the business. Nets has invested over DKK 3.9 billion over the past two and a half years. Over DKK 800 million to upgrade IT platforms, strengthening IT security and developing products and a further DKK 3.1 billion in acquisitions, acquiring seven companies.

Customer-centric with a renewed focus on customer service

The strategic business transformation of Nets has also resulted in a cultural shift inside the business and a renewed focus on all stakeholders - banks, merchants, corporations and consumers. Utilising subject matter experts and relationships from different business units aided the development of the contactless Dankort where Nets brought together banks and merchants to drive the development as well as acceptance at merchant level with 38% of all issued Dankort cards supporting contactless payment within 12 months of launch.

Key Financials[2]

In the first half of 2016, Nets realised strong financial results and liquidity generation through solid organic revenue growth and a significantly improved cost structure. Revenue for the six months ended 30 June 2016 increased 5.7% to DKK 3,587 million from DKK 3,393 million for the same period a year earlier, while EBITDA before Special Items grew 13.2% to DKK 1,197 million from DKK 1,057 million. In 2015, revenue and EBITDA before Special Items increased 4.4% and 35.2%, respectively, over the 2014 figures. Throughout 2015 and the first half of 2016, Nets continued to invest in secure and stable operations, flexible and scalable IT services and innovative solutions.
Nets A/S, which is contemplated to be admitted to trading and official listing on Nasdaq Copenhagen A/S, has been formed for the purpose of acquiring Nassa Topco AS, the current parent holding company of the Nets operating group, pursuant to an IPO reorganisation, which will be carried out in connection with the IPO. Nets A/S does not currently have any material assets or liabilities and does not conduct any operating activities prior to the effectiveness of the IPO reorganisation and there are no financial statements reflecting the operations of the business conducted by the Company. Accordingly, the key financial results included in this announcement relate to consolidated historical financial information of Nassa Topco AS, which reflects the operations of the Nets group, and which is contemplated to be acquired by the Company upon completion of the IPO reorganisation.

Financial guidance

Investment Highlights

At the heart of a highly digitised, fast-growing society in the Nordic region

Nets is well positioned to capitalise on structural growth in the Nordic region, which has among the highest adoption rates of digital payments in the world and is one of the most attractive regions for digital payment providers in Europe. This is driven by the high speed at which Nordic consumers have traditionally adopted new technologies, the region's stable economies and the wider political push for digitisation. These factors are supported by generally supportive government policies which encourage further digitisation (e-ID networks, e-archiving etc.).

A unique business model and leading provider of mission-critical services to the Nordic payments ecosystem

Nets is a leading provider of payment solutions across the Nordics. Most importantly, Nets is present at nearly every point in the digital payment value chain: providing the merchant solution, acquiring the transactions, clearing and processing the transactions for issuers. This position provides Nets with a number of competitive benefits: it brings an unrivalled ability to drive adoption of new payment solutions (in particular contactless products), while enabling the Company to maintain its strong position in both card payments and account-based payments. As a result, Nets is ideally situated to capitalise on future technological and regulatory developments.

Well-positioned with an innovative and scalable platform

Nets has continuously invested in security and stability, scalable and flexible IT platforms, innovation with new product launches and a strong pipeline, whilst reducing costs. This has resulted in Nets achieving scale economics on its platforms. Despite an increase in annual investment spending on IT, Nets' IT costs per transaction have also decreased from 2014 to 2015.

A robust and attractive financial profile
Nets has a stable and predictable revenue model with a diversified customer base that is characterised by long-term customer relationships. Following its transformation over the past two years, Nets also has a track record of growth, balanced across all three business segments.  

Multiple drivers of future growth and further upside opportunities
Nets is a leading provider of digital payment services and related technology solutions in the Nordic region. The Company will benefit from the continued conversion of cash payments to electronic payments and from the underlying growth in e- and m-commerce. Nets also has a robust pipeline of new products, which are expected to drive revenue growth across all three business segments. The Company will also selectively pursue attractive bolt-on acquisitions that can further strengthen its position and product offering in the Nordic region.

Bank syndicate supporting the IPO
Deutsche Bank, Morgan Stanley and Nordea have been appointed to act as Joint Global Co-ordinators and Joint Bookrunners for the intended IPO. Danske Bank, DNB Markets, J.P. Morgan and UBS Investment Bank have been appointed to act as Joint Bookrunners. Carnegie, OP Corporate Bank, SEB, SpareBank 1 Markets and Sydbank Markets have been or are expected to be appointed to act as Co-Lead Managers. Lazard & Co. Limited is acting as financial advisor to Nets.

- Ends -

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Important notice

This announcement is not an offer to sell or a solicitation of any offer to buy any securities issued by Nets A/S (Nets or the Company) in any jurisdiction where such offer or sale would be unlawful and the announcement and the information contained herein are not for distribution or release, directly or indirectly, in or into such jurisdictions.

This announcement and the information contained herein are not for distribution in or into the United States of America. This document does not constitute, or form part of, an offer to sell, or a solicitation of an offer to purchase, any securities in the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act) and may not be offered or sold within the United States absent registration or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There is no intention to register any securities referred to herein in the United States or to make a public offering of the securities in the United States. Any securities sold in the United States will be sold only to qualified institutional buyers (as defined in Rule 144A under the Securities Act) in reliance on Rule 144A.

In any member state of the European Economic Area (EEA Member State), other than Denmark, that has implemented Directive 2003/71/EC as amended (together with any applicable implementing measures in any member State, the Prospectus Directive), this communication is only addressed to and is only directed at investors in that EEA Member State who fulfil the criteria for exemption from the obligation to publish an offering memorandum, including qualified investors, within the meaning of the Prospectus Directive as implemented in each such EEA Member State.

This announcement is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the U.K. Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order) or (iii) high net worth entities falling within Article 49(2)(a) - (d) of the Order (the persons described in (i) through (iii) above together being referred to as relevant persons).  The securities are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons.  Any person who is not a relevant person should not act or rely on this document or any of its contents.

This announcement does not constitute an offering memorandum and nothing herein contains an offering of securities. No one should purchase or subscribe for any securities in the Company, except on the basis of information in the offering memorandum published by the Company in connection with the potential offering and admission of such securities to trading and official listing on Nasdaq Copenhagen A/S. Copies of the offering memorandum will, following publication be available from the Company's registered office and, subject to certain exceptions, on the website of the Company.

Deutsche Bank AG, London Branch, Morgan Stanley & Co. International plc and Nordea Markets (a division of Nordea Bank Danmark A/S) (together, the Joint Global Coordinators), Danske Bank A/S, DNB Markets, a part of DNB Bank ASA, J.P. Morgan Securities plc and UBS Limited (collectively, and together with the Joint Global Coordinators, the Joint Bookrunners), Carnegie Investment Bank, filial af Carnegie Investment Bank AB (publ), Sverige, OP Corporate Bank plc, Skandinaviska Enskilda Banken, Danmark, filial af Skandinaviska Enskilda Banken AB (publ), Sverige, SpareBank 1 Markets AS and Sydbank A/S (together, the Co-Lead Managers and together with the Joint Global Coordinators and the Joint Bookrunners, the Managers) and their affiliates are acting exclusively for the Company and the selling shareholders and no-one else in connection with the potential offering. They will not regard any other person as their respective clients in relation to the potential offering and will not be responsible to anyone other than the Company and the selling shareholders for providing the protections afforded to their respective clients, nor for providing advice in relation to the potential offering, the contents of this announcement or any transaction, arrangement or other matter referred to herein.
In connection with the potential offering, the Managers and any of their affiliates, acting as investors for their own accounts, may subscribe for or purchase shares and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such shares and other securities of the Company or related instruments in connection with the potential offering or otherwise. Accordingly, references in the offering memorandum, if published to the shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by, such Managers and any of their affiliates acting as investors for their own accounts. The Managers do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

Lazard, which is authorised and regulated by FCA, is acting exclusively for the Company and no one else in connection with the potential offering and will not regard any other person as its client in relation to the potential offering and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for giving advice in relation to the proposed offering or the contents of this announcement or any transaction, arrangement or other matter referred to herein.

Matters discussed in this announcement may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and that can be identified by words such as believe, expect, anticipate, intends, estimate, will, may, continue, should, and similar expressions. The forward-looking statements in this announcement are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors that are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. The information, opinions and forward-looking statements contained in this announcement speak only as at its date, and are subject to change without notice.

[1] The stated ownership stakes represent indicative approximations of the beneficial ownership in Nets A/S  pre-IPO and after a reorganisation of the Nets' group structure to be carried out in connection with an IPO. The shareholders have invested in different Nets entities and the exact ownership stakes in Nets A/S after the reorganisation will ultimately depend on, among other things, a final offer price.

[2] Presented financials for H1 2016, H1 2015 and 2015 are Nassa Topco while financials for 2013 & 2014 are Nets Holding A/S. Revenue, is gross revenues net of interchange fees and processing fees. Special Items are costs or income that cannot be attributed directly to the Operating Group's ordinary activities and therefore adjusted for to allow a more comparable view of underlying operating performance. Special Items costs included reorganisation and restructuring costs, costs associated with business set-up, acquisitions and disposals, and Transformation Programme costs. Adjusted net profit as calculated by Nets, represents net profit for the period before amortisation of business combination intangibles & impairment losses and Special Items, less net financial income, less the tax effect of these adjustments.

[3]  2015 adjusted revenue of DKK 6,928 MM; revenue includes adjustments due to acquisitions of Kortaccept, Signaturgruppen and Storebox

This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Nets A/S via Globenewswire

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