Nuvei signs deal to be taken private by Advent

Deal puts enterprise value of US$6.3 billion on company

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Less than four years after it went public in what was the Toronto Stock Exchange’s largest tech IPO ever, Nuvei Corp. is going private in a deal that values the company at US$6.3 billion.

The buzzy Montreal-based payments technology firm, which scored an investment from Canadian actor Ryan Reynolds last year, announced Monday that it will be taken private by U.S. private equity firm Advent International.

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The all-cash transaction values the company’s shares at US$34 and has already got the O.K. from existing Canadian shareholders, Nuvei CEO Philip Fayer, private equity firm Novacap and pension fund CDPQ.

“This transaction marks the beginning of an exciting new chapter for Nuvei, and we are glad to partner with Advent to continue to deliver for our customers and employees and capitalize on the significant opportunities that this investment provides,” Fayer said in a press release announcing the deal.

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Under the deal, Fayer, who founded Nuvei in 2003, will indirectly own or control about 24 per cent of the equity in the new private company, with Novacap holding 18 per cent and CDPQ owning 12 per cent. (Fayer, Novacap and CDPQ collectively represent about 92 per cent of the voting power attached to all the shares.)

Fayer will remain as the company’s chair and chief executive, alongside Nuvei’s current leadership team, which is also sticking around.

The deal comes weeks after Nuvei announced that it had formed a special committee to evaluate expressions of interest from potential buyers, after speculation cropped up in media reports suggesting the business was about to be taken private by Advent.

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At the time, Nuvei confirmed it was in talks for a potential transaction involving continued significant ownership by certain holders of its multiple voting shares, including Fayer.

When Nuvei confirmed the talks, its TSX-listed share price was roughly $31, but it has steadily climbed ever since, sitting at almost $44 on Monday, when the deal was announced.

Richard Tse, a National Bank of Canada analyst who had named Nuvei a “potential takeout candidate” in 2022, thought the deal was “reasonably valued.”

“We believe the potential for a competitive bid is low given a non-solicitation covenant on the part of Nuvei and a meaningful ’break fee’ of $150 million,” he wrote to investors Monday.

Advent, which was founded in 1984, has made more than 415 private equity investments across more than 40 countries and as of Sept. 30, had US$91 billion in assets under management.

The firm is focused on business and financial services, health care, industrial, retail, consumer, leisure and technology investments.

Nuvei has said it will benefit from the significant resources, operational, and sector expertise, as well as the capacity for investment provided by Advent.

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“Bringing in a partner with such extensive experience in the payments sector will continue to support our development,” Fayer said.

That development has included a partnership Nuvei launched in January with software company Adobe to provide customers access to its payment technology.

The agreement with Adobe followed a partnership between Nuvei and Microsoft Corp. announced last year that will see the software giant start using Nuvei’s payments technology in the Middle East and Africa.

When Nuvei went public in September 2020, it set a goal of raising US$600 million. It was oversubscribed by 20 per cent and then its 14 underwriters bought more than four million shares through stock options they had. It wound up with an US$833 million IPO, shattering the TSX’s record for a tech IPO.

At the time, Fayer said the company “didn’t set out to be record-breaking” because his real aim was to reward his 800 employees with $100,000 in stock options and build capital for future mergers and acquisitions.

The Nuvei that has taken shape over the last few years is one that fits the profile of a differentiated global payments platform, Bo Huang, a managing director at Advent, said.

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“Our deep expertise and experience in payments give us conviction in the opportunity to support Nuvei as it continues to scale from its base in Canada as a global player in the space,” Huang said in a statement.

“We look forward to collaborating closely with Nuvei to capitalize on emerging opportunities to help shape the future of the payments industry.”

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The Advent deal, which requires shareholder and regulatory approvals, is expected to close in late 2024 or the first quarter of 2025.

— with files from Craig Wong in Ottawa

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