Information on the Target

Skrill Group, founded in 2001, is a prominent online payment system in Europe and ranks among the world's leading independent digital wallet providers, boasting over 36 million account holders. The Skrill Digital Wallet facilitates convenient and secure online payments, allowing users to instantly send and receive money in a cost-effective manner. With a mission to be the global preferred choice for online transactions, Skrill has significantly expanded its operations under Investcorp's ownership.

Investcorp acquired a controlling stake in Skrill for €25 million in March 2007 when the company reported revenues of €7.8 million and EBITDA of €3.7 million. As of the end of 2012, Skrill has grown to employ approximately 700 individuals and generated over €200 million in revenues with an EBITDA of €50 million, demonstrating substantial growth and a robust market position during this period of ownership.

Industry Overview in the Target's Specific Country

The online payment industry in Europe is experiencing rapid evolution, driven by technological advancements and increasing consumer demand for convenient payment solutions. As digital transactions become more prevalent, online payment systems have emerged as essential players, offering versatile and secure options for users. European consumers increasingly prefer digital wallets for their convenience and enhanced security features.

As regulatory frameworks evolve, companies in the online payment sector, like Skrill, benefit from both established market presence and the ability to adapt to new compliance requirements. This supportive regulatory environment encourages innovation while safeguarding consumer interests, creating a favorable climate for digital wallet providers.

Competition remains fierce within the online payment industry, with numerous players vying for market share. However, established brands are leveraging their reputation and customer trust to maintain a competitive edge. The growing trend towards e-commerce and mobile payments further solidifies the importance of secure and efficient online payment solutions, positioning firms like Skrill for continued success.

Investments in fintech are surging as venture capitalists recognize the potential for innovative solutions to meet consumer needs. The continuous advancement of mobile payment technologies and the integration of artificial intelligence into transaction processes are expected to further enhance user experience and operational efficiency in the online payment space.

The Rationale Behind the Deal

The decision to sell Skrill to funds advised by CVC Capital Partners for €600 million reflects Investcorp's strategic focus on generating returns while maintaining a minority stake in the company. This move allows Investcorp to realize substantial profits from its earlier investment while still participating in Skrill's future growth.

This acquisition is anticipated to provide Skrill with the necessary capital and resources to further scale its operations and enhance its market position. Partnering with CVC Capital Partners, a seasoned investment firm with expertise in scaling businesses, is expected to bolster Skrill's ability to pursue its growth objectives effectively.

Information About the Investor

Investcorp is an established provider and manager of alternative investment products, boasting over 30 years of experience in the financial services industry. Headquartered in Bahrain, Investcorp has a global presence, offering investment opportunities across various industries including technology, healthcare, and consumer products.

In recent months, Investcorp has actively expanded its portfolio, investing in several companies and successfully exiting key investments. This proactive investment approach underscores Investcorp's commitment to identifying high-potential opportunities and optimizing returns for its stakeholders.

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From an expert standpoint, the investment in Skrill by CVC Capital Partners represents a strategic opportunity for all parties involved. Skrill's established market presence and the growing trend towards digital payments position the company favorably for future profitability and expansion. The valuation of €600 million reflects Skrill's tremendous growth under Investcorp's ownership, and the continued minority stake illustrates confidence in the company's trajectory.

Moreover, CVC Capital Partners brings an extensive network and resources that could enhance Skrill's competitive positioning in the marketplace. The partnership is likely to promote innovation and operational improvements that could ultimately drive further revenue growth.

However, the competitive landscape must be carefully navigated, as new entrants and shifting consumer preferences pose ongoing threats. Skrill will need to focus on enhancing customer experience and safeguarding user trust to maintain its market leadership. The partnership with CVC offers the potential for strategic initiatives that can fortify Skrill's position amidst these challenges.

In conclusion, this deal appears to be a sound investment not only for CVC Capital Partners but for Skrill, as it continues its journey in the ever-evolving online payments sector. The forecast for growth in this industry, combined with Skrill's established brand and innovative capabilities, bodes well for future success.

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