Buyout firm EQT explores $2 billion sale of Banking Circle, sources say

By Milana Vinn, Amy-Jo Crowley and David French

(Reuters) – Private equity firm EQT (ST:) is exploring a sale of its majority stake in Banking Circle, hoping any deal would value the payments processor at more than $2 billion, including debt, several people familiar with the matter said.

EQT is working on the plan with investment bankers at Morgan Stanley, who in recent weeks have been informally sounding out potential buyers, including payments and financial technology companies as well as other buyout firms, said the sources.

The sources cautioned that no sale was guaranteed and spoke on condition of anonymity to discuss confidential information.

EQT and Morgan Stanley declined comment. Banking Circle did not respond to a request for comment.

Banking Circle helps facilitate cross-border payments through its technology platform and correspondent banking network, and counts e-commerce giant Alibaba (NYSE:) and fellow payments firms Stripe and Paysafe among its customers.

The Luxembourg-headquartered company also holds a banking licence in Europe, setting it apart from many other payments companies, which have sought to eschew the heavy regulatory oversight that comes with it. Last year, it clinched a licence to be an uninsured Connecticut state-chartered commercial bank, as part of efforts to expand in the United States.

Banking Circle generates annually around $400 million of revenue and $80 million of earnings before interest, tax, depreciation and amortization (EBITDA), according to four of the sources.

The business was initially founded in 2013 as a payments subsidiary of Denmark’s Saxo Bank, and was relaunched as Saxo Payments Banking Circle in 2016, before dropping the reference to Saxo a year later.

EQT bought its majority stake in Banking Circle for an undisclosed price in 2018. Founding staff of Banking Circle hold the rest of the company.

While valuations of payments companies have cooled somewhat since the boom at the turn of the decade, both industry players and investment firms retain significant interest in such companies, given digital transactions constitute an increasing percentage of money moves.

Nuvei, another of Banking Circle’s clients, agreed in April to be bought by investment firm Advent International in a $6.3 billion transaction that will take it private.