L Bank of Scotland (RBS) will today announce the sale of its credit card payment processing business to a duo of private equity investors in a £2bn deal generating up to a £900m profit for the bank.
Advent International and Bain Capital are set to buy the Global Merchant Services (GMS) operation, in what is set to be the UK’s largest private equity deal for almost three years, sources confirmed to City A.M. last night.
RBS is hoping to announce the sale alongside its first-half results today, but negotiations between the parties were still going on last night.
The deal is likely to see RBS, which is 70 per cent owned by the government, keep a stake smaller than a fifth in the business, and receive around £1.6bn from the US consortium. It is thought that roughly £1.4bn will be paid up front, with up to £250m deferred to a later date depending on GMS hitting certain performance targets.
The £2bn price tag is well below the £2.5bn sale price touted last month. Advent and Bain are expected to invest hundreds of millions of pounds in upgrading GMS’ ageing technology system.