ZURICH: Swiss stock exchange operator SIX Group has hired JPMorgan (JPM.N) to look at options for its payments unit, including a sale worth up to 2 billion Swiss francs ($2.1 billion), sources familiar with the plans told Reuters. The decision to kick off a strategic review comes amid a wave of mergers and acquisitions in the fragmented payments industry as consumers increasingly switch to card and mobile payments and as regulatory changes promise to open the market to more competition.
Several private equity groups have bought payments businesses to merge them with peers while some European companies are currently carrying out strategic reviews or have already hired banks to find new investors amid rising industry valuations. Zurich-based SIX helps process payments and provides debit and credit card terminals to retailers, restaurants and hotels. The annual core earnings of its payments business are about 145 million Swiss francs, a person familiar with the matter said. SIX may still opt for a stock market listing or could decide to sell a minority stake, the sources said. Any sale could fetch a multiple of about 14 times its expected core earnings, people familiar with the industry said. For decades, payments firms have existed as a backwater in the banking landscape. Usually set up by banks, they enjoyed a cosy relationship with them as customers but had little funds at their disposal to invest in technology. A new European Union directive is set to come into force next year which requires banks to open up their procurement of payments services to third parties. Technology newcomers including Adyen, iZettle, Square and Stripe are among a wave of fintech players who are trying to disrupt the relationship between banks and payment processors to widen options for how merchants are paid.
