Cardsave

We originally invested in Cardsave, the UK’s leading reseller of card payment terminals and credit and debit processing services to independent retailers, in November 2004, fully underwriting the equity component of a £37 million buyout and backing an ambitious and energetic management team led by Managing Director Jim Ormonde.

We secured the deal based on our flexibility in engineering an exit for the founder shareholder, plus our team’s excellent reputation in the services sector and the strong relationship we built with both the key intermediary and the management team.

Cardsave was founded in 1995 by an independent retailer frustrated by the high costs of credit and debit card processing available for his business. At the time of the buyout, Cardsave provided more than 20,000 retailers with a wide range of business services, including card processing, and was enabling small businesses to prepare for the transition to Chip and PIN.

The business had several key attractions from an investment perspective: Cardsave had established a clear competitive advantage and a scaleable business model with recurring revenue streams from a diverse customer base. The introduction of Chip and PIN was driving impressive growth in a sector with high barriers to entry, providing Cardsave with a unique expansion opportunity.

During our ownership, Cardsave increased its revenues by over 34% between 2004 and 2006 and was on a steep growth trajectory. Terms of trade with key suppliers were renegotiated in favour of Cardsave. The management team was strengthened in key areas, with the notable appointment of Mark Dann, a key player in the secondary buyout, as Finance Director. Significant investment was made in recruitment, training and performance measurement of the sales force. We also appointed a highly experienced non-executive chairman, Ralph Kanter, who added significant strategic value to the business.

We realised our investment in Cardsave in August 2007 through a secondary buyout. The transaction valued Cardsave at £72 million, giving us a return of approximately 3x its original investment. The sale represented the third exit from our first fund, RL Private Equity Fund I.

Cardsave’s reputation as the small business card payment specialist has continued to evolve and develop and today the business has more than 45,000 members operating across a multitude of business sectors.

To discuss Cardsave in more detail, please contact John Dillon.