Private equity firm Palamon Capital Partners has agreed the sale of Retail Decisions (ReD) to ACI Worldwide for USD205 million, subject to regulatory approvals.
The sale will result in total Sterling investment returns for Palamon of 2.5x invested capital.
ReD is a provider of payment fraud prevention technology and services to merchants, card issuers, acquirers and processors. The company’s flagship product ReD Shield, a real-time, online fraud prevention solution, is used by large e-commerce and multi-channel merchants in North America, Europe, Asia-Pacific and Latin America, to boost online revenues while reducing fraud losses.
Palamon acquired ReD in a take-private in December 2006 alongside co‑investors Morgan Stanley Alternative Investment Partners and AlpInvest. At the time of its acquisition, in addition to its payments fraud prevention business, ReD operated fuel and gift card businesses in Europe and Australia. Following the global financial crisis, Palamon fully de-levered the company and returned 80 per cent of invested equity through three separate division sales: the UK Fuel Cards business in August 2009, the Australian businesses in September 2010 and the European fuel card business in March 2011. As a final phase of the investment, Palamon devised a strategy to accelerate growth in the remaining payments fraud prevention business focused on strengthening management and committing to significant investment in product innovation and partner channel expansion.
Fabio Massimo Giuseppetti, partner at Palamon, says: “As the largest investment in the Palamon II portfolio, ReD has been a highly successful result for Palamon. Having de-levered the business and returned most of our invested capital through the early divisional divestments, we were able to focus on the “jewel in the crown”; the global fraud prevention business. We successfully delivered on our investment thesis by backing a highly scalable SaaS business model with transaction-based revenue and we are delighted with the results achieved.”
Paul Stanley, chief executive at ReD, says: “We have thoroughly enjoyed working with Palamon and are proud of the results we have achieved together. Their understanding of the e-commerce space combined with their experience in payments and enterprise software was invaluable in establishing ReD as a global leader in fraud prevention. Significant investments in new products and sales channels have further strengthened our global platform and we are well placed to continue delivering strong growth. We look forward to working with ACI Worldwide in the next phase of our development.”
