What's going on?

US private investment firm Hellman & Friedman announced on Monday that it has agreed to buy Danish digital payments firm Nets for over $5 billion. It�s just the latest example among many of acquisitions in the payments industry.

What does this mean?

Nets said back in July that it had been approached by various potential buyers. The interest in it came just as a slew of other deals in the industry were being made, including the $10 billion takeover of Britain�s Worldpay by American competitor Vantiv. After months of negotiations with both industry competitors as well as private investment firms, Nets chose to sell itself to Hellman & Friedman. The firm aims to grow Nets� footprint outside of the Nordic region, which currently accounts for the vast majority of Nets� revenue.

Why should I care?

For the market: Nets� shareholders are only kind of winning.


Nets became a publicly traded company last year (i.e. completed an IPO) � its two major investors, Bain Capital and Advent, sold part of their ownership in the company. The stock, however, fell about 30% in the following months, and the company is now being bought for only a bit more than its value at the time of its IPO. So it hasn�t been the most lucrative of journeys for many, if not most, of its investors.

The bigger picture: There are lots of deals being struck in the payments space.


There are lots of payments firms in existence, and the huge amount of competition puts pressure on companies to innovate while also cutting prices for their customers � which tends to hurt profits. The solution to that problem is often �consolidation� � which means companies buying one another and combining their operations (in other words, reducing competition) � and there�s lots of that taking place in the payments industry right now. Investment firms (such as Hellman & Friedman) are likely aiming to make a profit by selling their investments (like Nets) to competing companies in the not-too-distant future (as part of the overall consolidation effort).