MasterCard pays $100m to acquire Irish-based Orbiscom

ORBISCOM, THE Irish electronic payments software company, has been acquired by credit card issuer MasterCard for approximately $100 million (€73.4 million).

Last September Orbiscom announced its technology was being used to create the Mastercard in Control platform which enables internet and telephone purchases to be made without revealing their real card details. Royal Bank of Scotland was the first financial institution to implement MasterCard in Control for its commercial card customers.

"By adding Orbiscom's expertise, intellectual property and talented team of innovative payments-industry professionals to MasterCard, we will further accelerate the development of new payment solutions for our customers," Robert Selander, chief executive of MasterCard said in a statement.

Orbiscom will become a wholly-owned subsidiary of Mastercard but the company brand and products will be maintained. Orbiscom chief executive Garry Lyons said the sale was "a good result for shareholders and MasterCard" and he now hopes to grow the business further.

The main beneficiaries of the sale will be Orbiscom's founders, Graham O'Donnell and Ian Flitcroft, and European private equity group HgCapital. Orbiscom has a complex share structure with many shares held though nominee accounts and holding companies but according to accounts filed with the Companies Office last October Mr O'Donnell, Mr Flitcroft and Hg Capital "are deemed to be controlling parties" of the company. Other shareholders include Dublin businessman Paschal Taggart, who is chairman of Orbiscom, AIB, who was an early investor, Enterprise Ireland and Alphyra Group Holdings, which is now part of London-listed PayZone.

Through share option schemes in 1999 and 2004 staff also have a stake in the company. Orbiscom has offices in Blackrock, Co Dublin, and New York and employs 50 people.

In an announcement to the London Stock Exchange yesterday HgCapital said the sale represented a multiple of 1.8 times its original investment and would realise it £5.5 million (€5.9 million). In 2001 HgCapital invested $17.5 million in Orbiscom in a fund-raising round organised by Goodbody Corporate Finance.

Orbiscom was founded in 1999 and received a number of patents for its payments technology which allows credit and debit cards to be used securely online.

Its accounts for the year 2007 show that it had retained losses of $34.6 million. The bulk of these were built up in its early years of trading when it grew fast and had overheads of $20 million a year. The company has been managing costs more tightly and it generated a profit of just over $1 million in 2007.

Orbiscom customers include leading international financial institutions and internet firms such as Citi, Bank of America, Wells Fargo, PayPal, Swedbank and Banque Populaire.

Orbiscom was advised by law firm Maple and Calder.