Private equity funds eye stakes in Vocalink

Private equity funds are eyeing stakes in Vocalink, which underpins Britain's payment systems, as a new regulator considers breaking up the banks' ownership of the company.

Vocalink is controlled by a group of 17 banks, with the "big four" - Lloyds, Barclays, HSBC and Royal Bank of Scotland - dominating ownership. It provides the infrastructure supporting financial transactions in the UK, from salaries to mortgage payments.

The Payment Systems Regulator has launched a review scrutinising the company's ownership after raising "questions of competitiveness of the infrastructure" that could be detrimental to consumers.

A number of private equity funds including CVC Capital Partners and Permira are already in talks with Vocalink about potentially acquiring stakes in the group, according to people familiar with the situation.

Private equity funds have snapped up stakes in other payment systems across Europe in the past 18 months as the trend away from bank-owned structures gains momentum.

Advent International and Bain Capital led a consortium that purchased the Nordic payment services group Net Holding from a group of banks last year.

A number of private equity groups recently entered into talks to buy Istituto Centrale delle Banche Popolari, the Italian payment systems provider owned by several co-operative banks. Permira, CVC, Bain Capital and Advent International are among the interested parties, according to one source.

David Yates, chief executive at Vocalink, said the company was "supportive of the regulatory objective of opening up access to payment systems".

"Although we're open to a PSR-driven change of ownership, there needs to be a large degree of care. Our infrastructure works every day, in a resilient way."

Vocalink processes payments to the value of three times the UK's GDP each year.

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The regulator has the power to force divestment of certain payment companies - such as Vocalink - if it finds the market is not competitive due to ownership structures. The PSR's review is set to complete within a year.

Hannah Nixon, managing director of the regulator, has previously said that the review could lead to breaking up the banks' control. "All options are on the table. We're looking carefully at what impact those options could have," she said.

Banks controlling Vocalink could choose to put the company up for sale without waiting for the regulator's judgment.

CVC Capital Partners and Permira declined to comment.

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