20% stake in its unit that processes credit card payments will be retained by the Royal Bank of Scotland Group Plc, during the planned sale of the unit to Bain Capital LLC and Advent International Corp according to two people with knowledge of the matter. The purchase of the unit, called WorldPay with a value of 2.5 billion pounds, by Bain and Advent might be completed before the announcement on August 6th of the earnings, by RBS based in Edinburgh. Representatives of Bain and Advent though have declined to comment. RBS which is the biggest bank of Britain owned by the government is selling its assets including its insurance division, 318 UK bank branches and WorldPay after receiving 45.5 billion pounds of funds from the UK government during the credit crisis, more than any other bank in the world.
The chief executive officer of RBS, Stephen Hester is reducing the size of the bank which had posted the biggest loss in a year in the corporate history of UK. According to some people who ar familiar to the matter, WorldPay could fetch up to 2.5 billion pounds. WorldPay is a credit card payment processing system. It operates in as many as 40 countries providing the payment processing services to clients, which include medium size and small size businesses. According to the website of Royal Bank of Scotland, it is amongst the 10 largest processors of online payments in the United States.
Meanwhile Bain Capital LLC and Advent International Corp are seeking 1.35 billion pounds or 2.1 billion dollars in loans in order to finance their bid to buy the credit card processing unit. This deal would add about 5.3 billion dollars of underwriter buyout financing in Europe last year, according to Bloomberg compiled data. This is 53% more than what it was during the same time last year. RBS, which has been taken over by the UK government after the bailouts, is the most prolific underwriter of all kinds of leveraged loans in Europe. Private equity firms make payments for takeovers by loading debt on a target company and then use the cash to repay the lenders. These borrowings are considered to be leveraged or below BBB- by Standard and Poor. Currently a group of lenders are arranging the financing including 400 million pounds in mezzanine debt according to sources close to the matter.