Mar 2021

Source: Alcentra

Currencies Direct Completes £165 Million Dividend Recapitalisation

Transaction Supported by incumbent lenders Alcentra and CVC Credit

Palamon Capital Partners (“Palamon”), a pan-European growth investor, and Corsair, a global specialist investment firm focused on financial & business services and infrastructure, today announced that portfolio company Currencies Direct (the “Company”), a global leader in digital foreign exchange (“FX”) and international payment services to high value private clients and SMEs, completed a £165 million dividend recapitalisation. The recapitalisation was provided by incumbent lenders Alcentra and CVC Credit, who backed Palamon and Corsair’s acquisition of Currencies Direct in 2015. The refinancing includes a 5.5x senior portability feature.

Currencies Direct is one of the largest platforms globally in an increasingly consolidating international payments market. The Company focuses on high-value transactions and the mass affluent segment of the FX market, as well as SMEs. Currencies Direct combines a full-stack, fully digital offering (c. 80% of total trades) with a premium, award-winning customer service model that allows it to cater to the universal needs of its target customer segments.

Since Palamon and Corsair’s acquisition in 2015, Currencies Direct has increased revenue from £40 million (CY2015) to £85 million (CY2020), and nearly tripled EBITDA from £13 million to £33 million over the same period, with net leverage reducing from more than 5.5x at acquisition to 1.1x at the time of the dividend recapitalisation, enabling a substantial return of capital for shareholders. The Company has grown organically by tripling the size of its customer base, expanding its B2B2C affiliate network and broadening its geographic reach. Currencies Direct also recently signed an exclusive white label agreement to provide FX services to Hargreaves Lansdown, one of the largest wealth managers in the UK with approximately 1.5 million active clients.

Currencies Direct’s strong cash generation has also allowed the Company to self-fund three add-on acquisitions and complete a significant £20 million investment in a full upgrade of its digital assets, including a proprietary and highly scalable transactional platform that opens numerous avenues for additional growth. The platform uses API and Machine Learning capabilities and enables full transactional and bankside straight-through processing. Its multi-tenant architecture allows the Company to seamlessly pursue its global, multi-brand strategy and M&A programme – supporting its continued growth into European, US, and Asian markets. Currencies Direct has also broadened its product range with the launch of new multi-currency wallets that serve customers making smaller transactions, improving the Company’s penetration of the lower mass-affluent market segment.

Ali Rahmatollahi, Partner of Palamon, said, “Completing a sponsor dividend recapitalisation during the global pandemic is a true testament to the business’s resilient model, attractive financial profile, and ability to consistently deliver growth and profitability despite Brexit and difficult market conditions. Our lending partners CVC and Alcentra have been supporting us since the initial acquisition and we are delighted to have their continued backing.”

Derrick Estes and Raja Hadji-Touma, Partners at Corsair, said, “Currencies Direct has undergone a period of tremendous growth and transformation over these last few years while providing unmatched FX and payment processing services to their rapidly expanding customer base. We are pleased that CVC and Alcentra share our confidence in the long-term growth opportunities for the Company and are excited for this next chapter.”

Keith Hatton, Chief Executive of Currencies Direct, said: “With Palamon and Corsair’s financial and strategic support, we have been able to implement a highly successful growth strategy that has nearly tripled the size of the business in five years. Currencies Direct is at an exciting turning point, and our continued investment in technology over the past three years has set the stage for a new phase of transformative growth. Our recent wealth management contract wins and growing global footprint – including through the recent opening of our new office in Singapore – underline our success in pursuing new expansion initiatives.”

Kris Winter, Executive Director at Alcentra said, “We have been supporting Currencies Direct since the initial acquisition and have continued to be impressed by the resiliency and the performance of the business, driven by its differentiated and defensible value proposition. With banks still holding approximately 80% share of the FX market and new international territories being targeted, there is significant room for Currencies Direct to continue its strong growth trajectory.”

Chris Fowler, Managing Director at CVC Credit said, “Currencies Direct has demonstrated impressive resilience amid global disruption and even managed to increase revenues and EBITDA through 2020. We remain confident in the Company’s long-term growth prospects and are pleased to continue to support the business.

Awards

  • EuroHedge Awards 2017 Winner
  • Barron’s
  • HFMWeek 2017 - European Performance Awards
  • Global Capital Awards 2016 - Best Institutional Investor in Senior Loans
  • ALT Credit Intelligence 2016 - European Performance Award
  • BarclayHedge 2015 - Ranked #1 in the Distressed Securities Category
  • CreditFlux 2015 - Manager Awards 2015
  • Private Debt Investor Awards 2014 - Deal of the Year
  • Private Debt Investor Awards 2014 - Direct Lender of the Year
BNY Mellon